Working from home is no longer the exception. Many self-employed professionals - lawyers, architects, developers, consultants - have both their tax domicile and their business address in the flat where they live. The question is simple: can that professional use cost them the capital gains exclusion when they sell the property?
In a recent Binding Ruling (Case No. 30465, 11 May 2026), the Portuguese Tax Authorities (PTA) refused to apply the reinvestment regime under the Personal Income Tax Code to a lawyer who carried out his professional activity at the property where he lived. The ground was a single one: the property was not used exclusively as his own permanent residence.
The bottom line
The law refers to property "intended as the taxpayer's own permanent residence" - not to property intended exclusively for that purpose. The exclusivity requirement is nowhere in the PIT Code, and case law has decided against the PTA's position.
How the reinvestment regime works
The PIT Code excludes from taxation capital gains from the sale of property intended as the taxpayer's or their household's own permanent residence, provided the sale proceeds - less repayment of any acquisition loan - are reinvested within the statutory deadlines in the acquisition, construction, extension or improvement of another property with the same purpose.
The law also requires the property sold to have been the taxpayer's own permanent residence, evidenced by their registered tax domicile, in the twelve months before the transfer. This requirement came with the "Mais Habitação" legislation: it started at twenty-four months and was later reduced to twelve.
The case reviewed by the PTA
Since 2019, a lawyer owned a flat where he registered his tax domicile and also carried out his professional activity. At the time of acquisition the property was registered for tax purposes as designated for "services"; the designated use was only changed to "housing" in 2026.
The PTA concluded the reinvestment regime did not apply, on one argument only: part of the property was used for a service-provision activity, so it was not exclusively used as the taxpayer's own permanent residence.
Why that reasoning is weak
1. Exclusivity is not in the law
The provision refers to property "intended as the taxpayer's own permanent residence". As this defines the scope of taxation, imposing an unwritten requirement administratively conflicts with the principle of tax legality.
2. Case law says the opposite
In CAAD Arbitration Court Judgment, Case No. 315/2025-T, of 5 December 2025, part of the property was leased to the taxpayer's own company while the owners continued to live there. The court held that partial professional use does not, in itself, prevent qualification as the owner's own permanent residence.
3. The administrative courts follow the same line
In the judgment in Case No. 498/08.9BECTB, of 13 July 2023, the court held that declaring the registered address of a professional activity at the property being sold does not mean it ceased to be the household's own permanent residence.
4. The concept is substantive, not formal
An own permanent residence is where a person stably organises their personal and family life. That centre of life is what counts - not an exclusivity the law does not impose.
Taken to its logical end, the argument collapses
If the PTA's view held, any property where the taxpayer also worked would stop being their own permanent residence. A lawyer, architect or developer using their home as a business address would have no own permanent residence for tax purposes - even after decades living there, with tax domicile and centre of life at the same address.
The same reasoning would, in theory, apply to employees working remotely. The PTA is unlikely to go that far, but the arguments used offer no useful criterion to distinguish self-employed from employed workers.
The tax system itself already recognises, in other contexts, that residential and professional use can coexist in the same property - allowing, for instance, part of housing costs allocated to an economic activity to have tax relevance.
The preliminary issue left unanswered
There was an earlier point the PTA did not address: can a property registered for tax purposes as designated for "services" since 2019 be regarded as intended as an own permanent residence, when the designation was only changed in 2026?
The answer is not straightforward. The law requires the property to be intended as the taxpayer's own permanent residence for a given period and identifies the means of proof: the registered tax domicile. It would make sense to assess first whether a tax domicile may be registered at a property designated for services and whether, having registered it and actually living there, the required qualification is met. That - not exclusivity - is where a defensible ground for refusal might have been.
What to do if this is your situation
Check the property's registered designation, keep your tax domicile up to date in the twelve months before the sale, keep evidence of actual residential use (utilities, correspondence, contracts) and document the reinvestment within the legal deadlines. If you receive an assessment on this ground, there is solid basis to challenge it.
Final remark
The tax authorities' position is concerning. If it is not promptly corrected, this interpretation could have consequences well beyond the specific case, potentially affecting the reinvestment regime for thousands of taxpayers who carry out all or part of their professional activity in the home where they actually live. In the current economic and social context, it is hard to sustain that partial professional use of a home should, in itself, strip the property of its status as an own permanent residence.
It would therefore be desirable for future administrative decisions and court rulings to refocus the discussion on the requirements the law actually lays down, avoiding interpretations that, besides lacking a legal basis, lead to manifestly inappropriate outcomes.
Frequently asked questions
Does working from home cost me the capital gains exclusion?
Under the law and known case law, no. The provision does not require exclusive residential use. The PTA's binding ruling says otherwise, but without support in the wording of the law.
How long must my tax domicile be at the property?
Twelve months before the date of transfer, evidenced by the registered tax domicile.
What if the property is registered as "services"?
That is a real and separate risk: it is worth changing the registered designation to housing before selling and gathering evidence of actual residential use.
Is a binding ruling binding on me?
It binds the PTA towards the taxpayer who requested it, in that specific case. It is neither law nor a court decision - it can be challenged administratively, in court or in arbitration.
If you have sold, or plan to sell, the home where you also work, the analysis must be done case by case, with evidence prepared before the sale. Grupo Your's tax consulting team handles these cases and helps structure the reinvestment without surprises.
