# Capital gains tax re investing



## lockewarren (Feb 4, 2012)

Quick question as I seem to betting conflicting info through google... I am uk resident, my husband is a non uk tax payer living in Dubai. Currently selling our apartment in Portugal and buying a villa. Do we pay the full 28% capital gains tax on the sale of the apartment even though we are re investing the entire amount back in to another property? Is there any part of this 28% that can be offset giants uk tax code with the EU tax treaty? (or am I completely misunderstanding this?!)... so far getting a capital gains tax for 26,000 euro having only owned the apartment for 2 years and wanting to invest more in a villa seem's a bit harsh!!


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## RichardHenshall (Jul 26, 2009)

Since the property is in Portugal, any gains will *first* be taxed in Portugal under Portuguese rules. Since neither of you are Portuguese (tax-)resident there are no rollover options in Portugal(/EU) available to you.

The gains will then normally be taxed wherever you are (tax-)resident under that country's rules and any tax already paid will usually be allowed against the second country's tax demand (depending any tax treaties). In effect you end up paying the higher of the two country's assessments.

Even if it's the only property you own it will be taxed as a second home since you don't live there.

If you've really made a €90,000+ gain in two years I think you should consider yourself very fortunate.


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## lockewarren (Feb 4, 2012)

Thanks Richard.. very useful information. We did buy it at a good price but the profit made has simply been absorbed in capital gains tax and purchase costs which add up to about 80,000 euro just on taxes and fee's. I think the lesson learnt was to not rush into the original purchase.. if I were to do it all again, I would rent somewhere for 12 months to see how much I like it and then buy! I absolutely love it but just feel that the place we bought is to small long term.. you live and learn!!!! Hindsight is a wonderful thing! Many thanks for the information.


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