# Capital Gains Tax on Property



## cab65

Having sold our property and bought a new one we had made about 20,000 euros on our original apartment, we could deduct various costs including the estate agent fees whch we did not have a bill for , our advogado did not return the tax form for over 18 months after the purchase and we have heard nothing since, despite numourous requests for information, is this usual and will we be liable for interest on the late payment? Has anyone else come across anything similiar please


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## canoeman

If your Resident? there should have been no CGT tax as you have allowable expenses and reinvested gain in another property (within 3 yrs?), however you could be fined for non registration etc.

It's unusual for Financas not to have picked up on sale and purchase, with your new apartment? are you still in the same district if not have you registered with the new Financas office.

If your resident do you realize that you are supposed to file a yearly tax return?


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## cab65

I am not a resident so do need to pay something but no bill so far and it seems a long time over two years, just don't want to end up with a big bill for interest due.


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## canoeman

You should have declared sale and profit on your UK income tax return as that is where your primary CGT liability would be as a second home, it doesn't matter that the second home is in Portugal, if your married you can use both of your CGT allowances if necessary. 

If you then had a Portuguese CGT liability, any UK tax paid would be offset.

I think you can only claim buying and selling costs not costs of maintenance, improvements etc.


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## dharmabum

canoeman said:


> You should have declared sale and profit on your UK income tax return as that is where your primary CGT liability would be as a second home, it doesn't matter that the second home is in Portugal, if your married you can use both of your CGT allowances if necessary.
> 
> If you then had a Portuguese CGT liability, any UK tax paid would be offset.
> 
> I think you can only claim buying and selling costs not costs of maintenance, improvements etc.


Hello, 

I don't intend to step on anybody toes here, but... i really think this problem needs a new lawyer...


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## canoeman

No you need to consult HMRC in UK or a UK accountant first. 

Then tackle the Portuguese end.


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## dharmabum

canoeman said:


> No you need to consult HMRC in UK or a UK accountant first.
> 
> Then tackle the Portuguese end.


I'm sorry i thought that the property cab65 sold was in Portugal.

But if you are in Portugal for 183 days in one year time you are considered resident. Even if you are not considered resident in Portugal, the capital gains received for the property have to be declared in Portugal and be taxed. =|
This was the reason i said cab65 needed a lawyer.

Sorry for the misinterpretation


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## oronero

Would I be correct in thinking that the capital gains tax (CGT) on Portuguese property, if you are a resident is 20% (25% if non resident) but that you are exempt from paying CGT if it is your primary residence and that the money is to be used for another house purchase inside the EU and within 36 months?

If you restore a house yourself or improve it in any way(beyond maintenance), can the materials be offset later against CGT or do you have to have used a builder for it to be deductable against future CGT upon sale?

I see that it appears that money can be removed from Portugal without CGT on the sale of your main residence and be reinvested into another EU country providing it is going into another main residence according to this here.


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## canoeman

Not quite as a Resident you pay CGT on *50%* of gain @ 25% as a *Non* Resident you pay CGT on *100% *of gain @ 25%
A Non Resident *cannot* rollover any gain
A Resident* can* rollover gain on their *primary residence to another primary residence* within 36 months (there's a little more flexibility on type of primary residence and family) anyehere within EU/EAA, you must declare this in the IRS return for the year of sale Anexo "G"
Capital Expenditure for 5 years prior to sale corrected receipted can be offset against gain


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## oronero

Thanks *canoeman*, it's not too bad then, overall 12.5% of the gain, on a second property if you're a resident.


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## canoeman

Depends on amount involved then I suppose, still a chunk of €'s though


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## oronero

I think the days of making a financial gain without having to pay society are long gone.

Should you be fortunate enough to gain a profit from your second house then remember that you are only paying 12.5% CGT and if it was straight forward earnings you could be paying over 40% in income tax!


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## canoeman

The earnings which have already been taxed for you to have the money to buy/invest in a second home unless it's a inheritance


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## oronero

canoeman said:


> The earnings which have already been taxed for you to have the money to buy/invest in a second home unless it's a inheritance


Point taken, you are correct with the 'realist's perspective' on the matter! 

I was approaching the matter as somebody coming from abroad with the money already! 

I am just scheming and may come up with lots of daft sounding questions over the next few weeks.


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