# Capital Gains Tax



## revez (Mar 16, 2014)

Hi all and a very Merry Christmas!!
We are selling our our house now and thinking of buying the land and build our new house from scratch. Will the cost of plot+cost of building count as re-investment so no CGT will apply if the cost of plot and building is higher than the house sold? Any time limits apply to complete the building and also is it an issue if the land is purchased prior to the sale of the house?
Thanks for your replies


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## TonyJ1 (May 20, 2014)

revez said:


> Hi all and a very Merry Christmas!!
> We are selling our our house now and thinking of buying the land and build our new house from scratch. Will the cost of plot+cost of building count as re-investment so no CGT will apply if the cost of plot and building is higher than the house sold? Any time limits apply to complete the building and also is it an issue if the land is purchased prior to the sale of the house?
> Thanks for your replies


The law that governs this is under article 10 and articles 42-52 of the CIRS. I suggest that you do at least a google translation of this. In essence this is what the law says - The reinvestment counts 24 months before and 36 months after the sale of the property (see article 10 -5 b) of the CIRS code). 

Yes - land and construction costs do count for the roll over relief provisions. However, ensure that you have proper invoices and other supporting documentation and with proper description (often missed out and then not accepted by tax inspector at an audit) (invoices on the back of cigarette boxes are not acceptable). The roll over relief only applies to primary residences. I strongly suggest that you get professional help in preparing you tax returns whilst going through these transactions.


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## revez (Mar 16, 2014)

Thanks Tony, downloaded, seems pretty straight forward once all facturas are in order. 
In relation to the sale of the house - is advogado a must or can do without?


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## TonyJ1 (May 20, 2014)

revez said:


> Thanks Tony, downloaded, seems pretty straight forward once all facturas are in order.
> In relation to the sale of the house - is advogado a must or can do without?


As long as the money goes to your banking account - who cares.

Seriously, these transactions are normally done in front of a notary public (or equivalent e.g casa pronta), and it is your choice whether to use a lawyer or not. The notary will check that all the documents are in order. In the case of a purchaser it may be advisable to use a lawyer, in any case, at least a survey - ensure that what you are buying is as described in the documentation unless you know how to interpret references locations etc. In some cases easier than others (e.g. apartment blocks).


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## revez (Mar 16, 2014)

Great help, thanks for your clear answers Tony


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