# Pre-2026 Leases Now Qualify for Portugal's 10% Rental Tax Rate

> Portugal's new 10% flat IRS rate on moderate rents also covers leases signed before 2026, letting landlords keep far more rental income.

- Source: https://www.growinportugal.com/news/landlords-on-pre-2026-leases-can-now-claim-portugal-s-new-10-2026-10-03
- Publisher: GrowIN Portugal (https://www.growinportugal.com)
- Published: 2026-10-03
- Last reviewed: 2026-10-03
- Language: en

> **Key figures — as of 2026-10-03:** Decree-Law 97/2026 (20 May 2026) cuts the autonomous IRS rate on qualifying rental income from 25% to 10% — monthly rent must stay at or below €2,300 (2.5× the 2026 minimum wage) and the contract must run at least three years — the reduced rate applies to leases signed before 2026 as well as new ones, covering income earned through 31 December 2029 — a separate 0% regime exists for rents at least 20% below the municipal median.

## A tax cut that quietly covers old contracts too

Landlords letting Portuguese property under contracts signed years before the 2026 housing package can still claim the flat 10% IRS rate on that rental income, provided the rent qualifies as "moderate." The reform cuts the autonomous IRS rate on rental income from 25% to 10% for landlords charging rents up to €2,300 per month, and it applies to both new and existing contracts, for income earned until 31 December 2029. For the many foreigners who bought a flat in Lisbon, Porto or the Algarve years ago and have been renting it out on an older contract ever since, that's a meaningful, retroactive-feeling tax cut that didn't arrive with much fanfare.

The legal basis is Decree-Law n.º 97/2026, of 20 May, which introduced the reduction via Article 45-C of the Tax Incentives Statute, with effects applying since 1 January 2026. The measure sits inside a wider package reshaping housing taxation announced by the government.

## How we got here: from confusion to decree-law

When the 10% rate was first floated, it wasn't obvious it would reach existing tenancies — plenty of early coverage assumed it was a sweetener for brand-new leases only. That changed when Portugal's Housing Minister stepped in publicly. The Minister of Housing clarified that this tax reduction will apply to all rental contracts, both new and existing, telling a conference audience the cut applies to "all contracts, including current ones, provided they charge rents below €2,300". That clarification, made months before the decree-law was formally published, is why so many landlords only recently realised a contract they signed in, say, 2019 or 2021 could already qualify.

## Who actually qualifies

The rate isn't automatic. The contract must run for a minimum of three years and be communicated to the Autoridade Tributária, and the property must be let for the tenant's permanent habitation, fall under the NRAU framework, and be correctly classified as residential with the tax authority. Short-term and tourist arrangements don't make the cut: Alojamento Local, tourist rentals, short-duration leases and commercial or services contracts are excluded from the regime. Rental income still gets declared the normal way — Category F, Annex F of the Modelo 3 — inside Portugal's annual IRS filing window of 1 April to 30 June.

Landlords who hold property through a company don't get the 10% personal rate, but companies renting at moderate prices get 50% of that rental income exempt from corporate tax instead. And the regime isn't limited to tax residents — a non-resident owner letting a Portuguese property under a qualifying contract pays the same reduced rate as someone living here full-time, provided the lease and rent level meet the conditions.

## GrowIN's math: what this is actually worth

Take a foreign-owned two-bedroom flat renting for €1,800 a month under a long-standing contract — €21,600 a year in gross rent. Under the old 25% autonomous rate, that's €5,400 a year in IRS. At 10%, it drops to €2,160 — a saving of €3,240 a year, or roughly €270 back in the landlord's pocket every month, before deductible expenses are even factored in. Push rent up to the €2,300 ceiling and the gap widens to over €4,100 a year between the old and new regimes.

**GrowIN Portugal Editorial:** *landlords who assumed this tax break only applied to brand-new tenants have likely been overpaying their IRS bill all year.*

## What to do, and what's still moving

Check three things: that your existing contract is formally communicated to Finanças, that the rent sits at or under €2,300, and that the lease term is at least three years (most open-ended NRAU contracts already satisfy this). Confirm the details through our [tax and NIF guide](/tax-and-nif/) or directly via the Portal das Finanças before filing. Worth flagging too: a separate exemption regime, the Regime Simplificado de Arrendamento Acessível, waives IRS entirely for contracts with rent caps up to 80% of the municipal median per square metre — a steeper discount than 10%, but a tighter rent ceiling. Given how recently the clarifications landed, it's worth confirming your specific contract's status with an accountant rather than assuming eligibility.

The headline rate may already be public, but plenty of landlords sitting on older leases still don't know it applies to them.

## Sources

- [DLA Piper — New Incentive Regime for Housing and Leasing in Portugal](https://www.dlapiper.com/en/insights/publications/2026/06/new-incentive-regime-for-housing-and-leasing)
- [The Portugal News — Proposed tax cuts for landlords](https://www.theportugalnews.com/news/2025-12-05/proposed-tax-cuts-for-landlords/928018)
- [Valadas Coriel & Associados — IRS on Rental Income Reduced to 10%](https://www.valadascoriel.com/irs-on-rental-income-reduced-to-10-for-moderate-rent-contracts-until-2029/)
- [Portal das Finanças](https://www.portaldasfinancas.gov.pt)

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© GrowIN Portugal. Cite as: GrowIN Portugal, "Pre-2026 Leases Now Qualify for Portugal's 10% Rental Tax Rate", https://www.growinportugal.com/news/landlords-on-pre-2026-leases-can-now-claim-portugal-s-new-10-2026-10-03