Portugal Rental Income Tax Calculator 2026

In 2026 four regimes compete for the same rent: 25% on residential letting (Article 72(2) of the IRS Code), 10% on moderate rents up to €2,300 a month (Article 45-C(1) of the Tax Benefits Statute, added by Decree-Law 97/2026) and the long-lease reductions, which take the 25% down to 5%. Above all of them sits the full exemption of the affordable-rent scheme (RSAA). They do not add up: the most favourable one applies. Other lettings stay at 28% (Article 72(1)(e)).

The three rates, and which one wins

• 25% — residential letting. Autonomous rate under Article 72(2) of the IRS Code, as worded by Law 56/2023 of 6 October.
• 28% — all other rental income. Retail, offices, garages and sub-letting, under Article 72(1)(e), as worded by Law 82/2023 of 29 December.
• 10% — moderate rents. Contracts intended exclusively for residential letting with a monthly rent up to €2,300, on income earned up to 31 December 2029 (Article 45-C(1) EBF, with effect from 1 January 2026 under Article 18(2) of Decree-Law 97/2026).
• Duration reductions. Where the property is the tenant's permanent home, the rate drops by 10 points for 5 to under 10 years — plus 2 points for each renewal of equal length, up to a limit of 10 points — 15 points for 10 to under 20 years, and 20 points from 20 years (Article 72(3) to (5)).
• 0% — affordable rent (RSAA). Full exemption from IRS and IRC for contracts meeting the scheme in annex iii to Decree-Law 97/2026, in force since 1 September 2026 (Article 6(1)).

The rule that settles it is at the end of Article 45-C(1): the 10% applies unless a more favourable rate applies. The two regimes do not combine. On a €900 rent under a 20-year permanent-residence lease, 25% less 20 points is 5%, and that is the rate; under a five-year lease with no renewals, 25% less 10 points is 15%, so the 10% wins.

Affordable rent takes the rate to zero, on three conditions

The RSAA, approved as annex iii to the same decree-law and in force since 1 September 2026, exempts qualifying rental income from both IRS and IRC (Article 6(1)). Zero is the most favourable rate of all, so it absorbs both the 10% and the long-lease reductions. The three conditions that rarely make it into the summaries: the rent must respect the maximum limit per municipality and property type in the annex to Portaria 454/2026/1 of 13 October, in force since 14 October — €1,309 for a two-bedroom flat in Lisbon, with two cumulative 10% uplifts for private parking and for energy class A or above (article 2(4)); no figure in the annex reaches the €2,300 of the 10% rate; for a permanent residence the contract must run for at least three years (Article 5(1)); and the landlord must file, on the IHRU platform by 15 January of the year after signing, a copy of the contract and proof that it was reported on the tax portal (Article 6(3)). Without that filing there is no exemption, and later non-compliance forfeits it from that moment, with compensatory interest (Article 7).

The €2,300 cap is not a round number picked at random

Article 2(2)(a) of Decree-Law 97/2026 defines a moderate monthly rent as 2.5 times the statutory minimum wage set for 2026. With the €920 minimum wage fixed by Decree-Law 139/2025, the cap is €2,300 a month, and Article 2(3) allows it to be updated by ministerial order using the factor in Article 24 of the Urban Lease Act. To measure it, Article 3 requires the whole amount paid under the contract to be counted, plus furniture, equipment and accessories permanently attached to the property and any services that add to its value, even where agreed separately — which rules out splitting the rent from a furniture hire to squeeze under the cap.

Expenses come off before the rate

The rate does not apply to gross rent. Article 41(1) of the IRS Code allows the deduction of costs actually incurred and paid to earn or secure the income: conservation and maintenance works, condominium fees, IMI, stamp duty on the contract, insurance and the energy certificate. Improvement works, furniture, appliances, items of comfort or decoration and AIMI are not deductible. If expenses exceed the rent, the negative result cannot be set against other income, but it carries forward for six years against rental income from the same property (Article 55(1)(b)).

See also the property capital gains simulator for selling the property, the short-term rental yield calculator for the holiday-let alternative, and HVR's guide to property investment tax in Portugal.

Frequently asked questions

What is the tax rate on rental income in Portugal in 2026?

It depends on the contract. Residential letting is taxed at 25% (Article 72(2) of the IRS Code) and other rental income at 28% (Article 72(1)(e)). Since 1 January 2026, contracts intended exclusively for residential letting with a monthly rent of up to €2,300 are taxed at 10% on income earned up to 31 December 2029, under Article 45-C(1) of the Tax Benefits Statute, added by Decree-Law 97/2026 of 20 May.

Does the 10% rate stack with the long-lease reductions?

No. Article 45-C(1) applies the 10% unless a more favourable rate applies. You get the lower of the two, never both: on a 20-year lease, 25% less 20 points is 5%, and 5% is what you pay.

Where does the €2,300 a month cap come from?

From Article 2(2)(a) of Decree-Law 97/2026, which defines a moderate monthly rent as 2.5 times the statutory minimum wage set for 2026. With the €920 minimum wage, the cap is €2,300 a month, updatable by ministerial order.

Does the affordable-rent scheme (RSAA) really mean 0% tax?

It does. Article 6(1) of annex iii to Decree-Law 97/2026, in force since 1 September 2026, exempts qualifying rental income from IRS and IRC. It requires rent within the limit in the annex to Portaria 454/2026/1 of 13 October, by municipality and property type (Article 4(1)), a minimum three-year term for a permanent residence (Article 5(1)), and filing on the IHRU platform by 15 January of the following year (Article 6(3)).

Which expenses can I deduct from rent in Portugal?

Conservation and maintenance works, condominium fees, IMI, stamp duty on the contract, insurance and the energy certificate (Article 41(1) of the IRS Code). Improvement works, furniture, appliances, decoration and AIMI are excluded.

Does a non-resident landlord pay the same rate?

Yes. Article 72 and Article 45-C do not distinguish residents from non-residents. What differs is aggregation: a non-resident is taxed at the autonomous rates, although EU and EEA residents may opt for the progressive rates of Article 68 only for the income in Article 72(1)(b) and (e) — which leaves out residential letting, taxed under Article 72(2) (Article 72(15)). Filing Anexo F is mandatory.