Gibraltar’s New Income Tax Rules on Residential Property Sales: What Portfolio Investors Need to Know in 2026

As one of the leading estate agencies in Gibraltar, our role extends far beyond selling property.  Our responsibility is to keep clients informed about the structural and legislative changes that shape the market - and one of the most important recent developments is the introduction of new income tax rules affecting certain residential property sales.

There has been understandable confusion surrounding this change, so in this article we set out clearly what the law actually says, who it affects, and what it means for investors moving forward.

A Targeted Tax - Not a Capital Gains Tax

First and foremost, Gibraltar has not introduced a general capital gains tax.

Instead, amendments made under the Income Tax (Amendment No. 2) Act 2024 to the Income Tax Act 2010 introduce a specific income tax charge on profits arising from the disposal of certain residential properties - but only where defined thresholds are met.

This is a targeted measure aimed at larger-scale residential property holders.  It does not apply to the majority of homeowners, and it does not automatically apply to small landlords.

Understanding that distinction is critical.

The Key Threshold: Five “Taxable Properties”

The legislation applies only where an individual:

• Owns or holds five or more “taxable properties”, or

• Has owned five or more taxable properties during five consecutive tax years

The threshold is five - not three, and not two.  Earlier consultation drafts referenced lower figures, but the enacted law sets the bar at five properties.

This means that individuals who own one, two, three or even four residential properties will generally fall outside the scope of this rule, provided they have not previously met the five-property threshold over a consecutive five-year period.

For investors with larger portfolios, however, the position changes significantly.

What Is a “Taxable Property”?

The definition is precise.

A “taxable property” refers to a residential property situated in Gibraltar, but several important exclusions apply.  The following are not counted:

• A person’s primary residence

• Commercial properties

• Hotels

• Retirement homes

• Churches or religious houses

• Properties constructed before 1 January 1988 and continuously owned since then

• Properties sold by the estate of a deceased person

These exclusions mean the legislation is specifically focused on modern residential investment stock.

When Do the Rules Apply?

The new provisions apply to disposals taking place on or after 1 January 2025.

Importantly:

• Sales that occurred before this date are not taxed under this new regime.

• However, prior ownership history can still be relevant when determining whether the five-property threshold has been met over consecutive tax years.

In other words, historical portfolio size matters when assessing whether an investor falls within scope.

What Type of Disposals Are Caught?

The rules extend beyond a straightforward sale of a completed property.

They can also apply to:

• The sale of contractual rights in off-plan purchases before completion

• The sale of shares in a company that owns Gibraltar residential property, where the seller meets the five-property threshold

Additionally, anti-avoidance provisions mean that transferring properties to connected persons in an attempt to reduce holdings below the threshold may not prevent the legislation from applying.

The scope is therefore wider than some investors initially assume.

Why Has This Been Introduced?

From a market perspective, this appears to be a policy measure designed to address large-scale residential property accumulation and trading activity.

Gibraltar’s housing market operates within unique constraints:

• Extremely limited land supply

• Consistent demand from the financial services, gaming and online sectors

• Ongoing development activity

• Strong rental demand

By targeting individuals holding five or more residential properties, the legislation appears focused on substantial portfolio investors rather than everyday landlords or owner-occupiers.

What Does This Mean for Portfolio Investors?

For those holding five or more qualifying properties, the implications are strategic rather than alarming.

1. Exit Planning Becomes More Technical

Investors who fall within scope must now factor income tax treatment into disposal decisions.  Gross sale price is no longer the only metric - net outcome matters more than ever.

Forward modelling and professional tax advice are essential before listing a property for sale.

2. Portfolio Size Requires Active Monitoring

Because the five-property threshold is central to the rule, investors should keep careful track of:

• Direct holdings

• Indirect holdings through companies

• Historical ownership over consecutive years

Portfolio composition is no longer simply a commercial matter - it has tax consequences.

3. Structure Matters

For investors operating through corporate vehicles or mixed ownership structures, professional advice becomes even more important.

It is worth noting that the sale of shares in a property-holding company can trigger tax implications under these rules if the seller meets the five-property criteria.

What This Does Not Mean

It is equally important to be clear about what this change does not represent.

• It is not a blanket tax on all property sales.

• It does not apply to primary residences.

• It does not apply to investors with fewer than five qualifying properties (subject to the historical test).

• It does not introduce a general capital gains tax in Gibraltar.

For the majority of homeowners and smaller landlords, the market fundamentals remain unchanged.

Will This Impact the Gibraltar Property Market?

In our professional view, this measure is unlikely to destabilise the market.

Gibraltar remains underpinned by:

• Severe land scarcity

• Continued inward demand

• High occupancy levels

• Ongoing development projects

• A stable legal and financial framework

If anything, this legislation may encourage a shift toward longer-term holding strategies rather than short-term portfolio turnover.

Serious investors tend to adapt to clear regulatory frameworks rather than retreat from them.

Our Advice

As a leading Gibraltar estate agency, we are not tax advisers - but we work closely with trusted legal and tax professionals to ensure our clients approach transactions in a fully informed manner.

Our guidance to investors is straightforward:

• Review your current portfolio size and history

• Seek professional tax advice before committing to a sale

• Consider the broader strategic picture, not just immediate pricing

• Factor post-tax outcomes into investment modelling

Most importantly, do not rely on outdated assumptions about tax treatment.

A Maturing Market

Gibraltar’s property market continues to evolve.  Legislative refinement is part of that maturation.

The introduction of income tax on disposals by larger-scale residential investors is not a signal of weakness - it is a targeted policy adjustment affecting a defined segment of the market.

For well-advised investors, opportunity remains.

As always, informed decision-making is the difference between reactive selling and strategic investment.

If you would like to discuss how these changes may interact with your portfolio or upcoming plans, our team would be pleased to arrange a confidential consultation and coordinate with your professional advisers where appropriate.

In a market as unique as Gibraltar, clarity and foresight are invaluable - and we are committed to providing both.

Disclaimer: This article is provided for general information only and does not constitute tax or financial advice.  Tax legislation and individual circumstances can vary, and we strongly recommend seeking advice from a qualified and registered Gibraltar tax adviser to understand how the rules may apply to your specific situation.