The idea that those who are 65 or older are automatically exempt from paying tax value in the sale of added to a home, while young people are required to do so on social networks. The allegation has some legal basis, but ignores important details of the legislation and, therefore, ends up induce error.
The starting point of the controversy
According to the IRS Code, Article 10 specifically, there is an exclusion of taxation applicable to the “taxable person or the respective spouse or de facto united, on the date of transfer of the property, it is proven to be renovated or at least 65 years old”. At first glance, this passage can be interpreted as an automatic exemption for those who reach this age.
However, according to the analysis by the polygrade, the isolated reading of this standard is deceiving. The regime provides for the dismissal of tax only when certain additional conditions are met, and it is not sufficient to be renovated or 65 years old.
Mandatory reinvestment in financial products
For the exemption to be applied, the value of the added value obtained with the sale is reinvested in savings instruments for reform. Among them are financial insurance of the life branch, open pension funds, contributions to the public capitalization regime or the individual Pan-European (PEPP) savings product.
These products must be subscribed up to six months after the sale of the property and duly declared in the delivery of IRS. In addition, contracts have to ensure regular payment to the holder for a minimum period of ten years, with an annual limit of 7.5% of the amount invested.
Another fundamental step is to expressly express the intention to reinvest the value in the income statement for the year in which the sale occurred. Otherwise, the exclusion of taxation does not materialize.
It’s not just the age that counts
The law also makes room for exemptions in other scenarios that do not depend on age. One of the best known applies when the value of selling its own and permanent housing is reinvested in a new residence for the same purpose. This rule is valid for properties located in Portugal, but also in other countries of the European Union or the European Economic Space, provided that there are fiscal cooperation.
According to the Tax Authority, the reinvestment must occur within 24 months before or 36 months after sale. In addition, the alienated house must have been used as its own and permanent housing in the 12 months prior to the operation or reinvestment, with some exceptions provided for by law.
An incomplete truth
Although it is true that the IRS code mentions the age of 65 as a criterion to benefit from the exclusion of added value, this is neither an automatic nor exclusive factor. The measure depends on compliance with specific rules and declarative obligations that may be demanding.
That is, it is not correct to say that only the elderly have access to this benefit. Young people and taxpayers from other age groups may also benefit from exemption, provided they re -amount to their own and permanent housing or comply with the other expected requirements.
According to, the shared statement on social networks, therefore, deserves the classification of “inaccurate”.
Also read:
