Rental Income — IRS Category F

Individual property owners who rent out residential or commercial premises declare that income under IRS Category F. Net rental income is taxed at an autonomous rate of 25% on residential leases and 28% on other leases (article 72 of the IRS Code), or residents may elect to aggregate it with their other income if that results in a lower overall tax burden. Residential rents up to €2,300 a month are taxed at 10% on income earned from 2026 to 2029 (article 45-C of the Tax Benefits Statute, Decree-Law 97/2026). Deductible expenses include maintenance and repair costs, property insurance, IMI (annual property tax) and management fees; financing costs and depreciation are not deductible (article 41). HVR prepares your annual IRS return and ensures all eligible deductions are correctly applied — including the reduced rates for permanent-housing leases of 5 years or more (article 72(3)-(5)).

Capital Gains on Property Sales

When you sell a property in Portugal, the taxable gain is calculated on 50% of the net gain (after deducting acquisition costs, improvement expenses and applying the annual monetary devaluation coefficient). For primary residence (Habitação Própria e Permanente), full exemption applies when you reinvest the proceeds in another primary residence within a set period. Residents over 65 may benefit from exemption when reinvesting in life annuities or PPR pension savings plans. HVR calculates your capital gains position and identifies every available exemption or deduction before your sale closes.

IMT, Stamp Duty and Acquisition Costs

Buying property in Portugal triggers several one-time taxes. IMT (Municipal Property Transfer Tax) applies on a sliding scale from 0% to 8% depending on property value, type and use. Stamp Duty (Imposto de Selo) is charged at 0.8% of the purchase price. A primary residence pays no IMT up to €106,346 (2026 band, article 17 of the IMT Code), and buyers aged up to 35 are exempt on their first primary residence up to €330,539 (article 9(2)). Non-resident buyers of residential property pay a flat 7.5% unless an exception applies (article 17(10), Decree-Law 97/2026). We model the full acquisition tax cost before you commit, and ensure purchase declarations are correctly filed.

AIMI — Annual Property Wealth Tax

AIMI (Additional IMI) is an annual wealth surcharge on the aggregate taxable value (VPT) of Portuguese real estate holdings assessed on 1 January each year. Individuals are exempt on the first €600,000 of VPT; the rate is 0.7% between €600K and €1M, 1% between €1M and €2M and 1.5% above (article 135-F of the IMI Code). Companies holding property pay a flat 0.4% on the total VPT with no exemption threshold. HVR reviews your portfolio annually to identify restructuring opportunities that reduce AIMI exposure legally and efficiently.

VAT on Construction (6% Reduced Rate from 2026)

From 2026, the Portuguese government extended the reduced 6% VAT rate to residential construction and renovation works, replacing the previous 23% standard rate for qualifying projects. Property developers and individual owners undertaking renovation benefit significantly from this change. HVR advises on which works qualify, how to structure contracts to access the reduced rate, and handles the VAT reclaim process for companies registered for VAT with construction activity. For property developers who sell housing units, the margin scheme may offer an alternative to standard VAT accounting on used properties acquired without VAT recovery.

Alojamento Local (Short-Term Rental) Accounting

Operating an Alojamento Local (AL) property — whether via Airbnb, Booking.com or direct booking — creates specific accounting and tax obligations: RNAL registration, 6% VAT on accommodation revenue, certified invoicing software with ATCUD codes, monthly SAF-T submission to the Tax Authority, and income taxation under IRS Category B (sole traders) or IRC (companies). HVR manages the full compliance burden for AL operators, from software setup to monthly filings and annual tax returns.

Support for Foreign Investors

Non-resident investors acquiring property in Portugal are required to appoint a fiscal representative for dealings with the Portuguese Tax Authority. HVR does not provide fiscal representation; we ensure your NIF is active, correspondence is monitored and all tax obligations are met on time. We also advise on the most tax-efficient acquisition structures — personal ownership versus a Portuguese or foreign holding company — taking into account your residence status, planned hold period and exit strategy. If you are relocating to Portugal, we can assess your eligibility for the IFICI/NHR tax regime.

Learn more: Fiscal representative in Portugal: guide | Get a NIF in Portugal