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Rental income tax in Portugal: what landlords pay

Updated 26 October 2026 · fisco.pt team · How we calculate

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If you let a property in Portugal, the rent is category F income for IRS. As a rule you pay a flat 25% on rent net of expenses, but long leases and moderate rents get lower rates, and you can choose to aggregate the income with the rest of your IRS. Here is how it works in 2026.

How rental income is taxed

Tax is due on rent received minus deductible expenses, at a special flat rate kept apart from the rest of your income unless you opt to aggregate (englobamento). It is settled in your annual return (Modelo 3, Annex F). Private tenants do not withhold anything, so you pay it all on assessment; tenants with organised accounting (companies) withhold 25%, which counts as tax already paid.

Rates in 2026

The long-lease reductions were revised by Law 56/2023 (Mais Habitação) and apply to leases for a permanent home; renewals of the same length bring further reductions, within the limits set in art. 72.º of the IRS Code.

The moderate-rent rate comes from Decree-Law 97/2026 (art. 45.º-C of the Tax Benefits Statute): housing-only leases with monthly rent up to 2.5 × the minimum wage (€2,300 in 2026) are taxed at 10% on income up to the end of 2029, provided the conditions are met (the occupant is named in the lease, housing use only, lease reported to the tax office). Where a lower rate already applies, the better one stands.

Deductible expenses

You can deduct IMI property tax (see the IMI guide), condominium fees, maintenance and repair works (including those in the 24 months before the letting starts) and building insurance. Mortgage interest, depreciation and furniture or appliances are not deductible. Keep invoices issued with your NIF for at least four years, as the tax office can ask for proof.

Worked example

A single taxpayer earning a €30,000 gross salary lets a flat for €800 a month to a private tenant. Figures from the fisco.pt IRS calculator (2026 income):

At this salary, aggregating costs €658.56 more than the 25% rate, because the rent would be taxed at marginal rates of 30.6% and 34.6% (see the IRS brackets). Aggregation only pays off when your marginal rate is below the special rate — typically low earners or small pensions.

Landlord obligations

• Report the lease on the Stamp Duty form Modelo 2 on the Portal das Finanças by the end of the month after it starts; stamp duty is 10% of one month's rent.
• Issue electronic rent receipts on the Portal das Finanças for every payment. Landlords aged 65 or over on 31 December of the previous year, and those not required to have an electronic mailbox, among others, are exempt.
• Modelo 44 — exempt landlords who do not issue receipts file this annual statement by the end of January.
• Annex F of your IRS return each year, with rents, expenses and the reduced-rate details.

Common mistakes

• Forgetting expenses — every euro of IMI or condominium fees saves 25 cents.
• Deducting mortgage interest or furniture — not accepted.
• Not reporting the lease — fines, and no reduced rates.
• Confusing letting with short-term rentals — alojamento local is self-employment income (category B); see the freelance guide.

FAQ

Do I pay tax on renting out a room?

Yes, as a rule it is category F income with the same rates and obligations.

When is the tax paid?

On the assessment of your annual IRS return, the year after; the payment deadline is on the assessment notice.

Is the reduced rate automatic?

No. You must meet the conditions and state them in Annex F.

I am not resident in Portugal — does this apply?

Portuguese rent is taxed in Portugal for non-residents too, generally at the same special rate. See Portugal tax for foreigners.