Selling your home in Portugal after 65: the capital gains exemption for reinvesting in a pension or insurance plan (2026)

What does the over-65 exemption do?

Normally, half of the gain on selling a Portuguese home is taxed at 12.5% to 48% (see capital gains tax). Main-home relief only removes that tax if you buy another home. The over-65 route is for people who sell and do not buy again: the money goes into a retirement product that pays you an income, and the gain is excluded.

It was introduced by the 2019 State Budget (Lei 71/2018) and has no end date. It sits in article 10 of the IRS Code, the Portuguese income tax code.

The paragraph number changed in 2026. Most sources still call this “article 10(7) and (8)”. Decree-Law 97/2026 of 20 May 2026 inserted the new rent-reinvestment exemption as paragraphs 7 to 9, and the over-65 rules moved, unchanged, to paragraphs 10 and 11. If an adviser refers to “10(7)”, check which regime they mean.

Who qualifies?

All of these conditions must be met (article 10(10) of the IRS Code):

#	Condition	Source
1	The home sold was your own and permanent home (habitação própria e permanente) or your household’s	Art. 10(10), referring to 10(5)
2	On the date of the sale, you or your spouse or unmarried partner (unido de facto) are 65 or over, or can prove you are retired	Art. 10(10)(b)
3	The sale price, minus any mortgage on that home repaid, and minus any part put into a new main home, goes into an eligible product	Art. 10(10)(a)
4	The product is bought within six months after the sale	Art. 10(10)(c)
5	For insurance and pension-fund products: it pays only a regular periodic income to you or your spouse for at least 10 years, capped at 7.5% a year of the amount invested	Art. 10(10)(d)
6	You state your intention to reinvest, and the amount, on the tax return for the year of sale	Art. 10(10)(e)

Three points in the detail:

• Only one of the couple needs to meet the age or retirement test. A 62-year-old selling a home with a 66-year-old spouse qualifies on the spouse’s age.
• “Own and permanent home” is proved by your tax address. For main-home relief, the law requires the home to have been your tax domicile for the 12 months before the sale (article 10(5)(e)). The over-65 paragraph refers back to the same gains, and the tax authority treats the home’s status as a condition. In tax arbitration case 663/2024-T (30 December 2024), it refused the exemption to a seller over 65 because she had moved out to redecorate before selling. The tribunal overturned that, but the case shows the tax address will be checked. Keep your tax address at the home until the sale.
• Retirement must be proved. The tax authority has not said what evidence of a foreign pension it accepts. If you are 65 or over, the age test is simpler.

Can foreign owners and non-residents use it?

The paragraph sets no nationality or residence condition. In practice, it suits people who are Portuguese tax resident and living in the home they sell, because the home must be your own and permanent home, shown by your Portuguese tax address.

Your situation	Likely position
Foreign retiree, tax resident in Portugal, selling the home you live in	Qualifies if the other conditions are met
NHR holder whose status has ended or is ending, still living in the home	Qualifies; NHR status is irrelevant to this exemption
Retiree selling before moving abroad, tax address still at the home	The text does not require you to stay in Portugal after the sale; not confirmed by the tax authority
Non-resident selling a holiday home	Does not qualify: it was never your own and permanent home
Former resident who moved abroad more than 12 months ago	Very unlikely to qualify under the 12-month tax-address test

The law does not say the product must be Portuguese, but the tax authority has not published guidance on foreign products; a Portuguese provider is the safer choice.

Which products count?

Product (Portuguese name)	What it is	Annex G code
Life-insurance financial contract (contrato de seguro financeiro do ramo vida)	An investment-type life policy, including a PPR retirement savings plan in insurance form	01
Individual membership of an open pension fund (adesão individual a um fundo de pensões aberto)	Includes a PPR set up as a pension fund	02
Contribution to the public capitalisation scheme (regime público de capitalização, or Certificados de Reforma)	The state top-up pension run by Social Security; open only to people in the Portuguese social security system	03
Pan-European Personal Pension Product (PEPP)	EU-standard personal pension	04

Is a PPR enough? Only in the right form. A PPR (plano de poupança reforma) can be sold as life insurance, a pension fund or an investment fund. The first two match the wording of the law; a PPR held in an investment fund (fundo de investimento) is not named. Ask the provider in writing which category the product falls into and whether it can pay a regular income that meets the 7.5% and 10-year rules.

How much do I have to reinvest?

The figure is the sale price (valor de realização), minus the mortgage on that home repaid, not the gain and not your net proceeds. Agent commission and other selling costs are not deducted from it.

That matters. On a €600,000 sale with €36,900 of commission, you receive €563,100 but must put €600,000 into the products for a full exemption. The difference has to come from savings, or you accept a partial exemption.

Partial reinvestment: only the proportional part of the gain is excluded (article 10(12)). If you reinvest two thirds of the required amount, two thirds of the gain is excluded and the rest is taxed normally. The law does not spell out the fraction; we assume it is the amount reinvested divided by the sale price net of the mortgage, the same approach used for main-home relief.

Worked example: a €600,000 villa sold by a retired couple

Anne, 68, and Pieter, 70, are Dutch and tax resident in Portugal. Their NHR status ended in 2025. They bought their villa, their main home, in 2012 for €250,000 and sell it in 2026 for €600,000 with no mortgage. Their other taxable income is €30,000 of pension, taxed as one person’s income for simplicity.

The gain

	Calculation	€
Sale price		600,000
Purchase price × inflation coefficient	250,000 × 1.20 (2012, 2025 table, provisional)	−300,000
IMT, stamp duty and deed costs on purchase	assumed	−12,000
Agent 5% + 23% VAT	600,000 × 5% × 1.23	−36,900
Energy certificate		−200
Gain		250,900

Three choices

	No reinvestment	Reinvest €400,000	Reinvest €600,000
Share of gain excluded	0%	400,000 ÷ 600,000 = 66.7%	100%
Gain still taxable	250,900	83,633.33	0
Taxable half	125,450	41,816.67	0
Total taxable income with €30,000 pension	155,450	71,816.67	30,000
Tax on total (incl. solidarity surcharge)	63,228.73 + 1,886.25	23,588.52	6,260.15
Less tax on the pension alone	−6,260.15	−6,260.15	−6,260.15
Extra tax caused by the sale	€58,855	€17,328	€0

The solidarity surcharge is 2.5% on taxable income between €80,000 and €250,000: (155,450 − 80,000) × 2.5% = €1,886.25. Rates are those of 2026 (Lei 73-A/2025); a proposed cut to the lower brackets for 2026 is not yet law. Model your own sale with the selling calculator.

To shelter the whole gain, they must invest €600,000, which is €36,900 more than they received after commission. Under the 7.5% cap, the product can then pay them at most €45,000 a year, for at least 10 years.

What are the payout rules?

An insurance contract or pension fund must aim exclusively at paying you or your spouse a regular income, without interruption, for at least 10 years, and never more than 7.5% of the amount invested in any year. No lump sums. The payments themselves are taxed under the normal rules for that product; ask the provider how.

What happens if I break a condition?

The exemption is withdrawn and the gain is taxed in a later year (article 10(11)):

Breach	Year the gain is taxed
Money not invested within six months of the sale	Year the six-month period ends
Payments in any year exceed 7.5% of the amount invested	Year the cap is exceeded
Regular payments are interrupted, for example by surrendering the policy	Year the payments stop

Article 10(31), which adds compensatory interest when the rent-reinvestment exemption is lost, does not mention paragraph 11. Whether interest is added in an over-65 case is not settled.

How do I declare it?

On Annex G of the IRS return (Modelo 3), table 5A, filed between 1 April and 30 June of the year after the sale:

Return	What to fill in
Year of sale	The sale in table 4. Field 5012: amount you intend to reinvest in the products. Field 5013: amount already invested in the year of sale, within six months. Field 5005: mortgage outstanding at the sale
Following year (if the six months run into it)	Field 5014: amount invested that year, within six months of the sale
Each year with an investment	Table 5A2: product code 01–04 and which owner made the investment

A sale on 1 September 2026 gives a deadline of 1 March 2027: declare the intention on the 2026 return (filed April–June 2027) and any 2027 investment on the 2027 return. Stating the intention is itself a condition (article 10(10)(e)), so include it even if you have already invested.

Can it be combined with other reliefs?

• Main-home relief (article 10(5)): yes, expressly. Paragraph 10(10)(a) deducts any amount reinvested in a new main home. You could put €250,000 into a smaller flat and the rest into a pension fund, each relief covering its share of the gain.
• Rent-reinvestment exemption (article 10(7), sales 2026–2029): unclear. Both can apply to a main-home sale, but the over-65 paragraph only deducts main-home reinvestment. The law does not say how the three combine; the tax authority has not published guidance.

Who does it suit?

It suits Portuguese-resident retirees selling the home they live in with a large gain, who want an income rather than another property, for example when moving to a rental or into care. That includes former NHR holders now paying 12.5%–48% on their pensions (see NHR ending).

It does not suit you if you need the capital itself, for example to buy in the UK (see moving back to the UK), or if the gain is small enough that 10 years of product charges could exceed the tax saved.

Key points

• If you or your spouse are 65 or over, or retired, the gain on selling your own and permanent home is excluded if the sale price, less the mortgage repaid, goes into an eligible retirement product within six months.
• Eligible products: financial life insurance, an open pension fund, the state capitalisation scheme or a PEPP. A PPR fits the wording only in insurance or pension-fund form.
• The product must pay a regular income for at least 10 years, never above 7.5% a year of the amount invested.
• Partial reinvestment gives a proportional exclusion; the amount to reinvest is the sale price, not the net proceeds.
• Declare the intention on Annex G, table 5A, for the year of sale; the rules are now article 10(10)–(11), not 10(7)–(8).
• It works in practice for Portuguese residents selling the home they live in; non-residents selling holiday homes do not qualify.