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KenUisce
Guest
I am planning to buy a Holiday Home in the Algarve. Will owning that holiday home change the status of my principal residence in Ireland re: capital gains if I were to sell the Irish property?
Is Principal Residence status affected by Holiday Home in Portugal?
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KalEl
Guest
No is the simple answer. You'll pay CGT in Portugal at 20% on any profit if you sell in the future. As we've a double taxation agreement with Portugal it's straightforward enough. You should have a will in Portugal dealing with assets held there though.
There may also be additional taxes due in Portugal while owning and disposing of the property. At least that's what I was lead to believe when reading the local English language newspaper over there when they had a series on foreign investment in Portuguese property.
ubiquitous
Registered User
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This will be the appropriate answer in most cases. However in some situations, ie where the property eventually could be considered your PPR because perhaps you live there more often than at home, the existence and use of the foreign property could possibly affect your PPR status.
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Guest127
Guest
Afaik CM is correct on Portugese taxes. they are a % of the value of the property and can easily add €1000-€1500 year to the other usual service charges.
I thought the current DTAs did not cover CGT, e.g. CGT could have to be paid twice.
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KalEl
Guest
It definitely doesn't have to be paid twice...I have two properties over there so know the scenario. There is a property tax as another poster pointed out but I have received an exemption for 5 years or so. Not sure why mind you!
Would you not want to find out in case this is a mistake?!
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KalEl
Guest
Would you not want to find out in case this is a mistake?!
Lol...no I didn't mean it like that. At the time I checked it was all above board and boxed off with a solicitor here, a solicitor there and tax advisors as well. It was a good while ago so I'm not so hot on the details!
Can you please point out which article of the tax treaty or tax treaty protocol states that?
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KalEl
Guest
No I can't...that's why I engaged a solicitor in Ireland, one in Portugal and a tax consultant from a large Dublin practice.
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Guest127
Guest
www.aquariusproperties.com/taxation-in-portugal.aspx might be helpful. looks like the cgt in portugal is 25%
I had a closer look at the DTA between Ireland and Portugal...
Article 13 Capital Gains
1. Gains derived by a resident of a Contracting State (e.g. Ireland) from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State (e.g. Portugal) may be taxed in that other State (e.g. Portugal)
Article 23 Elimination Of Double Taxation
1. Subject to the provisions of the laws of Ireland regarding the allowance as a credit against Irish tax of tax payable in a territory outside Ireland (which shall not affect the general principal hereof)
(a) Portuguese tax payable under the laws of Portugal and in accordance with this Convention, whether directly or by deduction, on income from sources within Portugal (excluding in the case of a dividend tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any Irish tax computed by reference to the same profits, income or gains by reference to which Portuguese tax is computed.
Article 13 Capital Gains
1. Gains derived by a resident of a Contracting State (e.g. Ireland) from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State (e.g. Portugal) may be taxed in that other State (e.g. Portugal)
Article 23 Elimination Of Double Taxation
1. Subject to the provisions of the laws of Ireland regarding the allowance as a credit against Irish tax of tax payable in a territory outside Ireland (which shall not affect the general principal hereof)
(a) Portuguese tax payable under the laws of Portugal and in accordance with this Convention, whether directly or by deduction, on income from sources within Portugal (excluding in the case of a dividend tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any Irish tax computed by reference to the same profits, income or gains by reference to which Portuguese tax is computed.