Pedro Correia Real EstateRental income tax: 25% or a reduced rate?
Owners sign a 1-year lease out of habit and pay 25%. From 2026 a rent of €2,300 or less gets 10% whatever the length, and a 20-year contract 5%. The difference is paid every year of the lease.
Before you sign a longer lease
- The tenant matters more than the rate. A 10-year lease with the wrong tenant costs more than 25%. Screening is the job; see property management.
- Rent updates still apply. Longer contracts are updated yearly by the official coefficient. A long lease is not a frozen rent.
- Non-residents pay the same rates. The reduced rates are not limited to Portuguese residents.
Full detail, with sources: Rental income tax in Portugal: 25% or 10%.
FAQ
What is the standard rate on rental income?
25% on net rental income (Category F) for residents and non-residents alike, unless you opt to add it to your other income.
What are the reduced rates?
Leases of 5 to 9 years: 15%. 10 to 19 years: 10%. 20 years or more: 5%. From 2026 a 10% rate applies to permanent-housing leases with rent up to €2,300 a month, whatever the contract length, existing contracts included, until the end of 2029. Check the mechanics with your accountant before filing.
What can I deduct?
IMI, condomínio charges, insurance, repairs and maintenance, and the municipal rate paid on the property, with invoices in your name. Not loan interest, furniture or your own time.