# Portugal Raises IRS Rent Deduction Cap to €900 for 2026 Income > Portugal's 2026 housing tax package lifts the IRS rent deduction ceiling to €900, rising to €1,000 in 2027 — here's how foreign tenants can claim it. - Source: https://www.growinportugal.com/news/renting-in-portugal-just-got-a-small-tax-break-deduction-cap-2026-10-12 - Publisher: GrowIN Portugal (https://www.growinportugal.com) - Published: 2026-10-12 - Last reviewed: 2026-10-12 - Language: en > **Key figures — as of 2026-10-12:** IRS rent deduction ceiling rises from **€700** (2025 income) to **€900** for **2026 income**, then **€1,000** from 2027 — under **Decreto-Lei n.º 97/2026** (20 May 2026) — deduction stays at **15% of rent paid**; lower-bracket taxpayers (first IRS bracket) get a higher cap of **€1,050 in 2026**, rising to **€1,100 in 2027**. ## A bigger — if modest — break for tenants Portugal's tenants can now deduct up to **€900** of rent from their annual IRS bill for income earned in 2026, up from the **€700** ceiling that applied to 2025 rents. The increase is progressive, rising to €900 in 2026 and €1,000 from 2027 onwards, under a decree-law aimed at easing the housing crisis. The change was signed into law in May but is only now getting attention as the 2026 tax year — the one this new cap actually applies to — gets underway, and as commentary on the 2027 state budget report reminds taxpayers the increase is already locked in. The mechanism itself hasn't changed: the deduction continues to correspond to 15% of the rent amount paid for permanent housing. What's moved is the ceiling on how much of that 15% you can actually claim back. For renters paying modest sums, the higher cap changes nothing — it only kicks in once your rent is high enough that 15% of it exceeds the old €700 limit. ## Who actually benefits This is where the fine print matters for foreign residents filing Portuguese tax returns, many of whom rent in Lisbon, Porto or the Algarve at well above the national average. A taxpayer with €6,000 in annual rent generates a deduction of exactly €900, and even with the new €1,000 ceiling will see no increase — it's only tenants paying rent high enough to hit the ceiling who can take full advantage of the extra €100 in 2027. GrowIN's own maths on the 2026 jump: to hit the *old* €700 cap, a tenant needed to pay at least €4,667 a year in rent (about €389/month) — well below what most foreign renters pay in Lisbon or Porto. To max out the *new* €900 cap, annual rent needs to reach €6,000, or exactly **€500/month**. Given that median asking rents in Lisbon and Porto have sat well above that threshold for several years, the practical effect is that most foreign tenants in Portugal's main cities were already capped at €700 and will now see their deduction rise by the full €200 — worth roughly €16.67 a month in tax terms, spread across the year. **"For anyone paying more than €500 a month in rent, this isn't a bigger incentive to rent — it's simply a bigger refund on rent you were already paying,"** says GrowIN Portugal Editorial. ## The paperwork that actually unlocks it None of this is automatic unless your landlord has done their part. The deduction only applies if the lease agreement for permanent housing is registered with Finanças and the rent payments have been communicated through electronic receipts. In practice, rent amounts typically appear automatically in e-Fatura, so taxpayers generally just need to confirm the figures at tax time rather than enter them manually. For your IRS return, rent is declared in Annex H, using code 05 in table 7, identifying the landlord by tax number — the rent amount is usually pre-filled. If a landlord hasn't issued proper electronic rent receipts (*recibos de renda eletrónicos*), the deduction simply won't show up — a common and avoidable mistake among foreign tenants who assume the benefit applies automatically just because they pay rent on time. It's worth checking your Finanças portal account (portaldasfinancas.gov.pt) each year rather than assuming your accountant or landlord has handled it. One wrinkle worth knowing: lower earners get a better deal. Taxpayers in the first IRS bracket get a higher deduction cap, and those between that bracket and €30,000 in taxable income have the limit calculated on a progressive formula — in practice meaning the €900/€1,000 figures quoted in headlines are the *general* ceiling, not necessarily the one that applies to every household. ## The landlord side of the same package The rent deduction didn't arrive in isolation. The same decree reduces the IRS rate on rental income from contracts with "moderate" rents — those not exceeding €2,300 a month — from 25% down to 10%, a bid to coax landlords into longer, formally registered leases rather than short-term or undeclared arrangements. For tenants, that matters indirectly: more landlords willing to register leases and issue proper receipts means more tenants can actually access the rent deduction in the first place. ## What foreign renters should do now If you're a tax resident paying rent in Portugal, there's nothing to apply for separately — this isn't a visa-style process through AIMA or a form to submit in advance. It shows up automatically in your IRS return for the relevant tax year, provided your lease is registered and receipts are issued correctly. The practical to-do list is short: confirm your landlord is issuing electronic rent receipts, check the figures that pre-populate in e-Fatura during the year, and don't assume the deduction has been applied just because you filed a return — verify the number against your actual annual rent. Filing happens during the usual **1 April – 30 June** window the year after the tax year in question, so the €900 cap applies to rent paid during 2026 and will be claimed on the return filed in 2027, not the one most people just submitted this year. For background on how Portuguese tax residency and filing obligations work for foreigners more broadly, see our tax and NIF guide. As with any tax matter, individual circumstances — income bracket, household composition, whether the lease is properly registered — change the outcome, so it's worth checking your specific situation against the current figures on Portal das Finanças or with a qualified accountant before assuming any particular euro amount applies to you. ## Sources - [Diário da República — Decreto-Lei n.º 97/2026](https://diariodarepublica.pt/dr/detalhe/decreto-lei/97-2026-1124493227) - [ECO (Economia Online)](https://eco.sapo.pt/2026/10/08/deducoes-das-rendas-de-casa-no-irs-sobem-para-1-000-euros-em-2027/) - [Portal das Finanças](https://www.portaldasfinancas.gov.pt) - [Doutor Finanças](https://www.doutorfinancas.pt/literacia-financeira/como-declarar-rendas-irs-2026/) --- © GrowIN Portugal. Cite as: GrowIN Portugal, "Portugal Raises IRS Rent Deduction Cap to €900 for 2026 Income", https://www.growinportugal.com/news/renting-in-portugal-just-got-a-small-tax-break-deduction-cap-2026-10-12