Capital gains: Reinvestment with tighter rules.
One of the changes introduced by Mais Habitação concerns the system for excluding from taxation capital gains from the sale of a permanent home (HPP) that are reinvested in a property for the same purpose.
More specifically, two requirements have been added in order to benefit from the exemption which, in practice, will reduce the number of cases in which the exclusion will be applied.
It should be remembered that, until now, gains from the sale of real estate intended for own and permanent habitation were excluded from taxation, provided that the realization value (sale value) - less any credit for the acquisition of the property - was reinvested in the purchase of another property or land for construction, for the same purpose (HPP), between 24 months before and 36 months after the date of sale.
Now, two more requirements have been added:
- the property sold must have been the permanent home of the taxable person or their family, as proven by their tax address, for at least 24 months prior to the date of sale;
- taxable persons may not have benefited from this exclusion regime in the year in which the gains were made or in the three previous years, “without prejudice to proof by the taxable person, made in the liquidation procedure, that non-compliance with this condition was due to exceptional circumstances”.
Source: Doutor Finanças