--- title: "Capital Gains on House Sale: How Reinvestment Exemption Works" description: "Are you selling a house? Learn how real estate capital gains are taxed and how the reinvestment exemption can save you thousands of euros in IRS." lang: en json-ld: | [ { "@context": "https://schema.org", "@type": "Article", "headline": "Capital Gains on House Sale: How Reinvestment Exemption Works", "description": "Are you selling a house? 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Capital Gains on House Sale: How Reinvestment Exemption Works [Back to blog](/en/blog) [Imobiliário](/en/blog?tag=imobili%C3%A1rio) # Capital Gains on House Sale: How Reinvestment Exemption Works GY [Grupo Your](/en/blog?author=Grupo%20Your) 14 June 2026· 2 min read Share ![Capital Gains on House Sale: How Reinvestment Exemption Works por Grupo Your - Grupo Your Contabilidade](https://xmvtahclopqwmxwnbimy.supabase.co/storage/v1/object/public/blog-images/grupo-your-mais-valias-venda-casa-isencao-reinvestimento.jpg "Capital Gains on House Sale: How Reinvestment Exemption Works por Grupo Your - Grupo Your Contabilidade") ## In this article - [How capital gains are calculated](#how-capital-gains-are-calculated) - [How much is taxed](#how-much-is-taxed) - [The reinvestment exemption](#the-reinvestment-exemption) - [Partial reinvestment](#partial-reinvestment) - [Special cases](#special-cases) - [What to document](#what-to-document) Selling a property for more than it cost generates a capital gain, which is generally taxed under IRS (Income Tax for individuals). However, the law provides an important exemption for those who reinvest in a new primary and permanent residence. Understanding the rules can save a lot of money. ### How capital gains are calculated Capital gain is the difference between the sale value and the acquisition value, updated by a monetary devaluation coefficient. Acquisition costs and valorisation works carried out in the last twelve years can also be added to the acquisition value, provided they are duly documented. ### How much is taxed For residents, only 50 percent of real estate capital gains are considered for IRS purposes, then added to other income and taxed at general rates. This 50 percent rule is crucial for the final calculation. ### The reinvestment exemption If the property sold was your primary and permanent residence, the capital gain may be exempt if you reinvest the proceeds in the purchase, construction, or improvement of another primary and permanent residence. The reinvestment must occur within the legal deadlines, typically between 24 months before and 36 months after the sale. ### Partial reinvestment If you only reinvest part of the value, the exemption is proportional. The unreinvested portion is taxed under general terms. ### Special cases There are specific rules for individuals over 65 and retirees who reinvest in retirement savings products, and for situations involving the repayment of housing loans. Each case has specific conditions that need to be verified. ### What to document Keep deeds, invoices for works, and proof of charges. Without documentation, you lose the possibility of increasing the acquisition value and pay more tax. At Grupo Your, we simulate the tax impact before the sale and help structure the reinvestment to take advantage of the exemption. If you are thinking of selling a house, talk to us before signing the deed. 0 0 Share ### Get the latest tax news Subscribe to our newsletter and receive articles, tax alerts and tips directly in your inbox. Subscribe I agree to receive email communications from Grupo Your. I can unsubscribe at any time. My data will be processed according to the [privacy policy](/en/privacy-policy). ### Need help with your company? Talk to us and receive a proposal tailored to your business. 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