Sell to buy

Between the figure a home sells for and the money actually available for the next purchase sits a set of deductions that rarely make it into the first estimate. The outstanding mortgage capital leaves in full on the day of the deed. On top of it comes the early repayment fee, which in Portugal is capped by law at a lower rate for variable-rate loans than for fixed-rate ones. The energy certificate and the remaining selling costs come out as well.

What is left is the net figure, and that is the one worth setting against the cost of buying. Comparing an asking price with an asking price is the fastest way to discover, far too late, that tens of thousands are missing.

Selling an own permanent home in order to buy another allows the capital gain to be excluded from tax, in proportion to what is reinvested. The rule carries a detail that changes everything: what counts as reinvested is the amount put into the new home without recourse to borrowing. Financing more of the next purchase eases the cash flow on the day of the deed and increases the tax bill the following year.

The mortgage capital repaid out of the sale is also deducted from the disposal proceeds before the proportion is worked out. That is why the simulator asks for the outstanding balance: without it, the relief would be understated every time.

The window is 36 months after the sale, or the 24 months before it where the purchase comes first, and the intention has to be declared in the IRS return for the year of the sale. Reinvesting is not enough on its own: it has to be declared.

Capital gains tax is not paid at the deed. It falls due with the following year's IRS return, months after both transactions have closed. Deducting it from the net proceeds would give a more cautious figure but a less truthful one: the money is there, on the day of the purchase, and it is that money you are counting on.

So the simulator shows it separately, with the rollover exclusion already applied. They are two different moments in your cash flow, and it is worth seeing them apart so that neither catches you out.

The figures in use are those in force in 2026 and are reviewed annually.