# Portugal Cuts Landlord Tax on Rental Income From 25% to 10%

> IRS on qualifying long-term rentals drops from 25% to 10% and the tenant deduction cap rises — what it means for foreign landlords and renters.

- Source: https://www.growinportugal.com/news/portugal-cuts-landlord-tax-on-rental-income-from-25-to-10-2026-09-27
- Publisher: GrowIN Portugal (https://www.growinportugal.com)
- Published: 2026-09-27
- Last reviewed: 2026-09-27
- Language: en

> **Key figures — as of 2026-09-27:** IRS autonomous rate on qualifying residential rental income cut from **25% to 10%**, effective 1 January 2026 through end-2029 — for contracts with monthly rent up to **€2,300** and a minimum 3-year term — applying to both new and pre-existing leases; tenant IRS rent deduction cap rises from €700 to **€900** in 2026 and to **€1,000** in 2027; qualifying companies (IRC) taxed on only **50%** of rental income; owners charging rent 20% below their municipality's median can pay **0%**.

## The headline number

Portugal has more than halved the tax bill on ordinary long-term rentals. This reduction, from the current 25% to 10%, applies across the board to all new or existing rental contracts with rents of up to €2,300 per month. Housing minister Miguel Pinto Luz was blunt about the scope of it, telling reporters it applies "for all contracts, current ones, as long as they charge rents below €2,300."

For anyone who owns a Portuguese apartment and rents it out on a standard long-term lease — resident or not — this is the single biggest change to rental taxation in years, and it lands at a moment when the government is desperate to pull empty units back onto the market.

## Where the law comes from and who qualifies

The cut rides on Lei n.º 9-A/2026, the housing authorisation law approved by parliament in February and signed by the President in March, which gave the government 180 days to turn the reforms into decree-law. Approved by lawmakers on February 20 and signed into force by the President on March 2, the legislation represents one of the most significant regulatory shifts in the country's housing sector in over a decade, aiming to address a structural deficit estimated at 300,000 homes. The rate cut itself took effect from 1 January 2026 through the state budget's amendment of Article 72 of the IRS Code, governing Category F (rental) income.

To qualify, a lease has to tick three boxes: it must be a habitational contract under the NRAU rental regime, the monthly rent can't exceed €2,300, a value corresponding to 2.5 times the 2026 national minimum wage, and the contract must run for a minimum of three years and be reported to the Autoridade Tributária. Short-term and Alojamento Local rentals are explicitly excluded — this is a long-term-lease incentive, not a tourism one.

Crucially for our readers, the reduced rate isn't a residency perk. The autonomous tax on rental income applies based on the nature of the income, not the tax residency of the owner — so a non-resident landlord letting out a flat in Porto qualifies exactly the same as a Portuguese tax resident, provided the contract meets the moderate-rent criteria. Companies renting property also benefit indirectly: for IRC purposes, qualifying rental income is now considered at only 50% of its value, effectively halving the corporate tax base on that stream.

## GrowIN's number

Run the maths at the €2,300 ceiling and the scale becomes obvious. Under the old 25% rate, a landlord collecting the maximum qualifying rent paid roughly €575 a month in IRS on that income (€2,300 × 25%). Under the new 10% rate, that falls to €230 a month — a saving of **€345 every month, or about €4,140 a year**, on a single property at the cap. That's GrowIN Portugal Editorial's own calculation from the published rate change, not a figure quoted in any official release — and it's the kind of swing that changes whether a marginal buy-to-let in Lisbon or Porto actually pencils out as a long-term rental versus staying empty or going short-term.

*"A landlord letting a flat at the €2,300 ceiling now keeps roughly €345 more a month than they did in December 2025 — that's the real story behind the housing package,"* says GrowIN Portugal Editorial.

## What renters get — and why it's smaller

Tenants see relief too, but proportionally less. The deduction to the tax bill for rent paid on a permanent home is reinforced, with its limit rising to €900 in 2026 and to €1,000 from 2027. The deduction itself stays at 15% of annual rent paid, so the cap only bites once rent passes about €500/month — below that threshold, tenants already deduct the full 15%. For most renters this is worth an extra €200 back at tax time compared with the old €700 ceiling, not the transformative relief landlords are getting.

There's a further twist for the most generous landlords: those who charge at least 20% below their municipality's median rent don't just get 10% — they can qualify for 0% income tax on that rental income, and companies renting at moderate prices see half their earnings exempted outright. There's also a capital-gains sweetener: sellers reinvesting proceeds into housing destined for moderate-rent letting can access an exemption on the gain, encouraging owners to recycle capital straight back into the rental stock.

## What to watch

The 10% rate and the AIMI exemption on units let below €2,300/month are billed as temporary, running only to the end of 2029, so anyone structuring a long-term rental strategy around this should build the sunset date into their planning. Contract registration with Finanças and electronic rent receipts remain non-negotiable — miss either and the reduced rate simply doesn't apply, regardless of what rent is actually charged. If you already hold NHR or the newer IFICI regime, run the comparison rather than assuming the flat rental rate automatically stacks better; the interaction between regimes isn't always intuitive. For a fuller walkthrough of how Portuguese rental income, NIF obligations and fiscal representation fit together for non-resident owners, see our [tax & NIF](/tax-and-nif/) hub.

Foreign owners weighing whether to formalise an existing lease, register a new long-term contract, or restructure a short-term let into the moderate-rent regime should get the paperwork right before year-end filings — GrowIN's [services](/services/) team can help confirm eligibility and handle the Finanças registration.

The direction of travel is clear: Portugal wants long-term landlords, and for now it's paying them to stay in the market.

## Sources

- [Iberian Property](https://www.iberian.property/news/market-updates/portugal-s-irs-falls-to-10-for-all-landlords-with-rents-up-to-eur2300-per-month/)
- [The Portugal News](https://www.theportugalnews.com/news/2025-12-05/proposed-tax-cuts-for-landlords/928018)
- [The Portugal Post](https://theportugalpost.com/posts/portugals-housing-law-opens-new-doors-tax-cuts-price-caps-and-higher-costs-for-foreign-buyers)
- [Caixa Geral de Depósitos — Saldo Positivo](https://www.cgd.pt/Site/Saldo-Positivo/casa-e-familia/Pages/pacote-fiscal-habitacao-2026-iva-irs-rendas-arrendamento.aspx)

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© GrowIN Portugal. Cite as: GrowIN Portugal, "Portugal Cuts Landlord Tax on Rental Income From 25% to 10%", https://www.growinportugal.com/news/portugal-cuts-landlord-tax-on-rental-income-from-25-to-10-2026-09-27