Selling an inherited house in Portugal: Rules and tax obligations you must know

What happens when you inherit a property?

When a house is inherited from a direct family member (parents, children, grandparents or grandchildren), the heir is exempt from paying transfer tax (Imposto de Selo). However, several obligations must still be fulfilled.

Declaring the inheritance to the Tax Authority

The property must be reported to the Portuguese Tax Authority within three months of the date of death using the “Modelo 1” form for Stamp Duty — even when exempt.

Once this declaration is submitted, the property is officially recorded under the heirs’ names, making it legally possible to proceed with the sale.

Updating the property registry (matriz predial)

After reporting the inheritance, it is mandatory to update the urban property registry to confirm ownership.

Valuing an inherited property

Before placing the property on the market, it is fundamental to determine its correct market value. A proper valuation avoids conflicts among heirs, ensures realistic pricing and helps estimate the eventual tax liability associated with the sale.

Understanding how much your property is worth is a critical starting point for informed decision-making.

Required documents to sell an inherited property

The documentation is similar to that required for any property sale, with additional documents relating to the inheritance.

Key documents include:

• Updated Tax Registry (Caderneta Predial)

• Permanent Land Registry Certificate

• Usage Licence (Licença de Utilização)

• Energy Certificate

• Technical Housing File (if applicable)

• Identification of all heirs

• Deed of partition (if already completed)

To avoid delays, sellers should review all documents required for sale before listing the property.

Selling with or without completed inheritance partition

The process varies depending on whether the partition has been finalised.

When the partition has been completed

The property is already registered under one or more heirs, and the sale proceeds like any standard transaction.

When the partition has not been completed

Sale is still possible, but all heirs must sign both the promissory contract and the final deed. This can cause delays, so many families choose to complete the partition first.

Taxation: how capital gains work when selling an inherited property

This is the most common source of confusion among sellers.

Who pays capital gains tax?

Anyone who is tax resident in Portugal and sells an inherited property is subject to IRS tax on capital gains, except in specific cases of exemption. The rules are detailed under capital gains on property.

How are capital gains calculated?

The calculation considers:

• The property’s taxable value (VPT) at the time of inheritance

• The final sale price

• Deductible expenses (renovations, previous IMT, sale-related costs)

• Inflation adjustment coefficient

• Taxable percentage of the gain (50% for residents)

The older the VPT at the time of inheritance, the higher the taxable gain may be.

IRS declaration

The sale must be declared on the IRS tax return for the year following the transaction.

Inherited properties with multiple heirs

When a property belongs to several heirs, coordination is essential.

Important points:

• All heirs must agree to the sale

• All must sign the promissory contract and the deed

• Sale proceeds are divided proportionally

• Each heir pays IRS on their share of the capital gains

Professional mediation can help resolve disagreements.

Regularisation before the sale

Inherited homes often have unregistered works, annexes or old modifications.

Before selling, the following must be verified:

• All constructed areas are legally registered

• The usage licence is valid

• No pending urban irregularities exist

• The energy certificate is updated

Addressing these issues ensures that buyers and banks do not encounter obstacles.

Selling an inherited property that is rented out

Selling is allowed even if the property is rented.

Key rules:

• The tenant has the right of first refusal

• The rental contract remains valid

• The new owner assumes all obligations

The seller must formally notify the tenant under Portuguese law.

Understanding the real estate market before selling

Before selling, analysing current market dynamics is essential. A detailed real estate market study provides insights into:

• Price trends

• Most sought-after property types

• Average selling times

• Buyer profiles

• Expected valuation trends

This information helps sellers position the property correctly for a faster and more successful sale.

Professional support when selling an inherited house

Selling an inherited property involves legal, fiscal and administrative considerations that can be complex. Professional guidance streamlines the process and ensures accuracy.

Engel & Völkers consultants support owners from the initial valuation to the final deed, helping them sell their apartment with efficiency, professionalism and security.

FAQ — Selling an Inherited Property in Portugal

1. Is it mandatory to pay taxes when selling an inherited property?

Yes. The sale is subject to IRS capital gains tax, except in cases where exemptions apply.

2. How are capital gains on inherited properties calculated?

Based on the VPT at the time of inheritance, the sale price, deductible expenses and inflation coefficients.

3. Can a property be sold if the inheritance partition has not been completed?

Yes, but all heirs must sign the promissory contract and the deed.

4. What if not all heirs agree to sell?

The sale cannot proceed without unanimous agreement.

5. Can a rented inherited property be sold?

Yes, but the tenant has right of first refusal.

6. Which documents are needed?

The usual documents for any sale plus those related to inheritance.

7. Can capital gains be reduced?

Yes, through documented deductible expenses.

Preparing to Sell an Inherited Property with Confidence and Professional Support

Selling an inherited home requires careful attention to fiscal rules, mandatory documentation and strategic planning. Proper valuation, early preparation of documents for sale and a clear understanding of how much your property is worth are essential steps to avoid errors, accelerate the process and maximise your return.

With a well-defined strategy and the right guidance, the entire process becomes more efficient, safe and transparent. The team at Engel & Völkers is ready to support you at every stage, from the initial market assessment to the commercial and legal follow-up.

If you need expert assistance, our consultants can guide you through the preparation of your property, the commercial strategy and everything related to selling your apartment. Contact us to discover how to sell your inherited property with confidence, security and the support of a leading international brand.