IRS 2017 - Capital Gains on Property
Apr 11th 2018, 9:33 pm
#1
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IRS 2017 - Capital Gains on Property
Extract from Portugal News - 5/4/18:
Capital Gain on Real Estate
Although it is the “AT”, not you, that does the actual calculation, it is always worthwhile anticipating what the final taxation will be. For a property sold last year originally purchased in 2004, the calculation of the Capital Gain is as follows:
Step 1: Based on the year of acquisition, multiply the original purchase price by the Inflation Adjustment Coefficient in the table.
Step 2: From the final sales price, subtract the adjusted purchase price, giving the gross profit.
Step 3: Subtract qualifying costs (commissions, notary fees, transfer tax, etc.)
Step 4: Subtract documented capital impro-vements invoiced in the past 12 years.
Step 5: The difference between adjusted profit and deductable expenses is your net taxable gain.
Step 6: One half of the net profit is assessed unless rolling the gain into another principal residence. Either way, report the sale on your annual IRS declaration.
Resident vs. Non-Resident Individuals
If you are Non-Resident for tax purposes in Portugal, the Capital Gains Tax calculation is quite simple: 25% of the full net profit. If you are resident in Portugal, there are two options:
1) You can exclude one half of the capital gain. The other 50% of the adjusted net profit is added to overall income for the fiscal year and taxed at marginal rates. Properties purchased prior to 1989 are exempt for Capital Gains Tax.
2) The gain may be rolled over if another principal residence of equal or greater value is bought between 24 months prior and 3 years after the sale. For newly acquired properties of lesser value, the gain is calculated on a pro-rata basis. If the reinvestment is less than the amount of the sale, you may owe additional tax and have to pay interest to Finanças on the non-reinvested balance. In the event that no reinvestment takes place, an assessment will be made on the entire non-reinvested balance plus interest. Since 2007, it is possible to reinvest anywhere within the EU. Note that proof of residency is required from the Tax Authority in the new country of residence.
Given that I am non-resident in Portugal, can anyone help by supplying a link to the "Inflation Adjustment Coefficient"?
Thanks in anticipation...
Capital Gain on Real Estate
Although it is the “AT”, not you, that does the actual calculation, it is always worthwhile anticipating what the final taxation will be. For a property sold last year originally purchased in 2004, the calculation of the Capital Gain is as follows:
Step 1: Based on the year of acquisition, multiply the original purchase price by the Inflation Adjustment Coefficient in the table.
Step 2: From the final sales price, subtract the adjusted purchase price, giving the gross profit.
Step 3: Subtract qualifying costs (commissions, notary fees, transfer tax, etc.)
Step 4: Subtract documented capital impro-vements invoiced in the past 12 years.
Step 5: The difference between adjusted profit and deductable expenses is your net taxable gain.
Step 6: One half of the net profit is assessed unless rolling the gain into another principal residence. Either way, report the sale on your annual IRS declaration.
Resident vs. Non-Resident Individuals
If you are Non-Resident for tax purposes in Portugal, the Capital Gains Tax calculation is quite simple: 25% of the full net profit. If you are resident in Portugal, there are two options:
1) You can exclude one half of the capital gain. The other 50% of the adjusted net profit is added to overall income for the fiscal year and taxed at marginal rates. Properties purchased prior to 1989 are exempt for Capital Gains Tax.
2) The gain may be rolled over if another principal residence of equal or greater value is bought between 24 months prior and 3 years after the sale. For newly acquired properties of lesser value, the gain is calculated on a pro-rata basis. If the reinvestment is less than the amount of the sale, you may owe additional tax and have to pay interest to Finanças on the non-reinvested balance. In the event that no reinvestment takes place, an assessment will be made on the entire non-reinvested balance plus interest. Since 2007, it is possible to reinvest anywhere within the EU. Note that proof of residency is required from the Tax Authority in the new country of residence.
Given that I am non-resident in Portugal, can anyone help by supplying a link to the "Inflation Adjustment Coefficient"?
Thanks in anticipation...
Apr 11th 2018, 11:05 pm
#2
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Joined: Jul 2009
Posts: 1,833
Re: IRS 2017 - Capital Gains on Property
Does Portaria n.º 326/2017 de 30 de Outubro cover what you need?
Apr 12th 2018, 8:19 am
#3
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Thread Starter
Joined: Apr 2013
Location: Newcastle and Tavira
Posts: 146
Re: IRS 2017 - Capital Gains on Property
Does Portaria n.º 326/2017 de 30 de Outubro cover what you need?
