Selling or inheriting a tenanted home in Portugal

When a rented home in Portugal is sold or passes to heirs, the lease does not end. The buyer or the heirs take over as landlord, on the same terms. Before you sell, a tenant who has rented the home for more than two years must be offered the chance to buy it at the same price. Heirs must report the death to Finanças within about three months. From 2026, sellers who reinvest the proceeds in homes let at moderate rents can avoid capital gains tax.

Does the lease survive a sale or the owner's death?

Yes. Under article 1057 of the Código Civil (Civil Code), whoever acquires the property "succeeds in the rights and obligations of the landlord". Lawyers know the principle as emptio non tollit locatum: a sale does not break a lease. It applies to a sale, a gift and an inheritance.

What this means in practice:

• The tenant does not need to agree to the change of landlord.
• The rent, the end date, the renewal terms and the annual update rules all stay the same.
• The deposit passes to the new landlord, who will have to return it at the end of the lease. Portuguese courts treat the deposit as part of the position the new owner inherits. When you sell, settle the deposit in the deed or the price.
• A sale is not a ground for ending the lease. A buyer who wants the home empty must use the normal routes: opposing renewal at a permitted date, or ending the lease for their own or a child's housing where the law allows it. Both have notice periods and conditions.

Who has a right of first refusal, and how long the tenant has to reply

Article 1091 of the Civil Code gives the tenant a direito de preferência (right of first refusal) when the home they have rented for more than two years is sold or handed over to pay a debt (dação em cumprimento). The two-year threshold dates from Lei 64/2018.

The right does not arise on a gift, an inheritance or a division between heirs (partilha). It covers sales only.

The procedure (art. 1091(4) and arts. 416–418):

1. Agree terms with your buyer first, usually in a draft or signed promissory contract (contrato-promessa).
2. Send the tenant the plan to sell and its terms by registered letter with acknowledgement of receipt (carta registada com aviso de receção). Include at least the price, the payment terms and the planned deed date.
3. The tenant has 30 days from receipt to accept. To accept, they must take the whole deal on the same terms.
4. If the tenant declines in writing, or the 30 days pass without a reply, you may sell to your buyer on the terms you sent.
5. If the terms then change in a way that matters, especially a lower price, notify the tenant again.

If the home is sold together with other properties, the letter must state the price given to the tenant's home separately (art. 1091(6)). Article 1091(8) applies to a flat in a building not divided into legal units (propriedade horizontal). It let the tenant buy a share of the building. In 2020 the Constitutional Court (ruling 299/2020) declared it unconstitutional with general binding force. Under art. 1091(9), tenants of such a building may still join together to buy the whole building.

What happens if you ignore the tenant's right

If you sell without giving notice, or sell on better terms than you offered, the tenant can bring a ação de preferência (preference action) under art. 1410:

• The deadline is six months from the date the tenant learned the essential terms of the sale.
• The tenant must deposit the price within 15 days of filing.
• If the tenant wins, they take the buyer's place. The buyer loses the home and must recover their money from you.

For this reason buyers, banks and notaries usually ask for proof that you gave notice: the letter, the postal receipt and the tenant's written reply.

Selling with a tenant or with vacant possession

Most buyers of homes to live in want vacant possession. Many will not buy with a tenant in place, or will offer less. For investors, a reliable tenant at a fair rent can be an advantage, especially now that rents up to €2,300 a month qualify for the 10% tax rate (EBF art. 45-C, 2026–2029).

Points that affect the price:

• The rent compared with the market. A below-market rent on a long lease weighs most on the price.
• When you can next lawfully end or not renew the lease. The landlord's notice periods depend on the lease's length and the date it started.
• The tenant's payment record. Show receipts and confirm there are no arrears.
• The tenant's preference right. The process adds at least 30 days to the timetable. Some buyers walk away rather than wait.

Do not pressure a tenant to leave so that you can sell. Harassment of tenants is prohibited under the urban lease rules (NRAU), and any agreement to end the lease early should be in writing. Agreeing a voluntary exit, often with a payment, is lawful.

Inheriting a tenanted home: who is the landlord?

When an owner dies, the property becomes part of a herança indivisa (undivided estate) until the heirs divide it. Until then the heirs hold the estate together. The cabeça-de-casal (estate administrator) runs it. Under Civil Code art. 2080 this role goes first to the surviving spouse if they are an heir or entitled to half of the couple's property, then to an executor, then to the closest legal heirs.

For the tenant:

• The lease continues unchanged (art. 1057).
• The estate is the landlord until the partilha. Rent is paid to the estate, and the administrator collects it and keeps the accounts.
• Once the home is allocated to one heir in the partilha, that heir becomes the landlord.
• Tell the tenant in writing who to deal with and the new bank details. Send a copy of the death certificate or the habilitação de herdeiros (deed naming the heirs).

What to update at Finanças

• Report the death. The administrator files Modelo 1 of imposto do selo (stamp duty) with Annex I, a list of the estate's assets. The deadline is the end of the third month after the month of death (CIS art. 26(3)). The return is required even when no tax is due.
• Get a NIF for the estate. The estate has its own tax number, requested on the Portal das Finanças (Herança Indivisa).
• Rent receipts. Electronic rent receipts must be issued by the administrator in the estate's name, using the estate's NIF. The administrator handles the lease declaration (Modelo 2) for the estate. If the administrator is over 65, paper receipts are allowed. Each co-heir must then file Modelo 44 for their share of the rent by the end of February.
• Income tax. Each heir declares their share of the rent in their own IRS return (Anexo F), in proportion to their share of the estate (CIRS art. 19).
• After the partilha. The heir who receives the home registers it at the land registry. From then on the lease records and receipts move to that heir's own NIF.

If it is the tenant who dies, different rules apply. Article 1106 of the Civil Code decides whether a spouse, partner or relative living in the home can take over the lease.

Stamp duty on inheritance

Portugal has no separate inheritance tax. Inheritances are taxed through stamp duty under item 1.2 of the stamp duty table:

For real estate the 10% is charged on the valor patrimonial tributário (VPT), the tax value in the property register. The 0.8% charge under item 1.1 applies to purchases and gifts of property, not to inheritance. The tax applies because the property is in Portugal, wherever the heirs live. Check whether your country of residence also taxes the inheritance and whether it gives credit for the Portuguese tax.

Capital gains when you sell: residents and non-residents

The gain is the sale price minus the acquisition value. Allowable costs are deducted: the costs of buying and selling, and documented improvement works carried out in the last 12 years. If you have owned the home for more than 24 months, the acquisition value is first raised by official inflation coefficients.

For inherited property, the acquisition value is the value used for stamp duty, normally the VPT, even if the heir paid no stamp duty (CIRS art. 45). The acquisition date is the date of death. A low VPT can therefore mean a large taxable gain. Property the deceased acquired before 1 January 1989 falls outside capital gains tax under a transitional rule.

• Residents. 50% of the gain is added to your other income and taxed at the progressive IRS rates (CIRS art. 43(2)).
• Non-residents. Since 2023 the same 50% rule and progressive rates apply. The 28% flat rate was revoked. You must declare your worldwide income, which sets the rate but is not itself taxed in Portugal.

Report the sale in Anexo G of the IRS return for the year of sale, filed between April and June of the following year.

The 2026–2029 reinvestment exclusion

Decree-Law 97/2026 added new rules to CIRS art. 10 (nos. 7–9). They apply to sales of homes made between 1 January 2026 and 31 December 2029, including homes you let rather than live in. Your gain is not taxed if all of these apply:

1. You reinvest the sale price, minus any mortgage on the sold home that you repay, in buying one or more homes in Portugal for rent.
2. You reinvest between 24 months before and 36 months after the sale.
3. You state that you intend to reinvest, and the amount, in your IRS return for the year of sale.
4. You sign a residential lease within six months of the reinvestment, or of the sale if later. The rent must not exceed the moderate-rent limit, €2,300 a month in 2026. Justified delays, such as urgent works, are allowed.
5. During the first five years you let the home for at least 36 months in total, the rent never exceeds the limit, and you do not sell or give the home away.

If you reinvest only part of the amount, only that part of the gain is exempt. If you break a condition, the gain is taxed in the year of the breach, plus compensatory interest.

The text sets no residence condition. Even so, non-residents should confirm with the tax authority or an adviser before relying on the exclusion.

Checklist

• Before selling: check whether the tenant has rented the home for more than two years. If so, send the registered offer letter with the full terms and wait 30 days or for a written refusal.
• At the deed: settle the deposit and the rent for the current month. Hand over the lease, the receipts and the tenant's details.
• On a death: appoint the administrator, request the estate's NIF and file Modelo 1 stamp duty by the end of the third month after the month of death.
• While the estate is undivided: issue receipts under the estate's NIF. Each heir declares their share in Anexo F.
• When selling a home with a gain: keep proof of works and costs. Decide early whether to reinvest under the 2026–2029 rules, and state it in your return.