Dividing Property After Divorce in Portugal

Understanding the Tax Implications of IMT, Stamp Duty, and IRS

Divorce may legally dissolve a marriage, but it does not sever the fiscal obligations that may arise from the division of assets — especially when real estate is involved.

This article outlines the three main tax exposures that can occur when ex-spouses divide jointly held property in Portugal:

1. IMT – Real Estate Transfer Tax
2. Stamp Duty (Imposto do Selo)
3. IRS – Personal Income Tax (Capital Gains)

1. Real Estate Transfer Tax (IMT)

IMT is generally not payable when property is divided between ex-spouses as part of a divorce, provided the marriage was under a community property regime (either comunhão de adquiridos or comunhão geral), and the property is split proportionally.

However, IMT will apply if:

• The couple was married under a separation of property regime (separação de bens), and
• One spouse receives more than their legal share of a jointly owned property (typically more than 50%).

Example:

• A property acquired for €300,000 is now valued at €900,000.
• One spouse keeps the entire property.
• If the matrimonial regime was separação de bens, IMT applies on €450,000 (the portion exceeding the recipient’s 50% share).
• IMT rates may reach up to 7.5%, depending on the nature and value of the property.

2. Stamp Duty (Imposto do Selo)

Stamp Duty is also triggered in asset divisions where one spouse acquires more than their share, and unlike IMT, this applies regardless of the marital regime.

Key points:

• Stamp Duty is levied on the portion of property transferred above the recipient’s legal quota (usually 50%).
• The applicable rate is 0.8%, regardless of the property's value or type.

Example:

• A property worth €900,000 is transferred entirely to one spouse.
• That spouse’s share would normally be €450,000.
• Stamp Duty is charged on the €450,000 excess, at 0.8%.

Even in a community property regime, if one party keeps an asset valued above their entitled share, Stamp Duty is due.

3. Personal Income Tax (IRS)

If one spouse relinquishes their share in exchange for monetary compensation (tornas), that transaction may be viewed as a taxable capital gain, subject to IRS.

This applies when:

• The property was jointly owned, and
• One spouse receives compensation for transferring their share to the other.

Example:

• Spouse A gives up their 50% share in a property now worth €450,000.
• Their original acquisition cost was €150,000.
• The difference (€300,000) may be taxed as a capital gain.

Exemptions from IRS may apply if:

• The property was acquired before 31 December 1989;
• The proceeds are reinvested within 36 months in a new primary residence, residential construction, or land for that purpose;
• The gain is declared properly in the IRS return (Modelo 3, Anexo G).

This treatment may also apply to other assets subject to public registration, such as company shares.

Conclusion: Professional Structuring Avoids Tax Pitfalls

While divorce itself is not a taxable event, the way property and financial settlements are structured may trigger significant tax consequences for both parties.

Careful legal and tax planning is critical, particularly when:

• The marital regime is separation of property;
• The real estate involved has appreciated significantly; or
• One party receives monetary compensation for transferring their share.

Need Legal & Tax Guidance?

We provide integrated family law and tax advisory for individuals going through divorce or asset restructuring. Contact us to ensure your settlement is compliant and tax-efficient.

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