How to reduce your taxable rental income by 50% in Portugal?
- Portugal Business News - Valerie Charoux
- 2 days ago
- 2 min read
Real Estate News Europe - This is how to reduce your taxable rental income by 50% in Portugal, according to expert advice from Elsa Costa, Consultant for the Order of Certified Accountants:
What is Portugal´s new Tax benefit on Rental Income in 2026?
Portugal´s Tax Benefits Statute, in paragraph 2 of Article 45-C, has provisions for companies and individuals with organized accounting to reduce their taxable rental income by 50% with the aim to encourage taxpayers to make properties available for residential rental by increasing the housing supply at prices considered moderate.
Portugal´s new Tax benefit applies exclusively to residential lease agreements where the monthly rent does not exceed the moderate rent limits stipulated in Decree-Law No. 97/2026 of May 20. In 2026, this limit corresponds to €2,300 per month, and the criterion of the annual average rent is also applicable to verify compliance with this requirement.
The Tax benefit takes effect with respect to income earned between January 1, 2026, and December 31, 2029.
How to reduce your taxable rental income by 50% if you are a Company in Portugal?
If you are a Company in Portugal, here is how you can reduce your taxable rental income by 50%:
The rental property must be integrated into the company's activity, with the deduction being made from taxable profit in the Model 22 tax return, allowing only half of the income obtained to be considered for the purposes of determining the taxable amount.
How to reduce your taxable rental income by 50% if you are an Individual in Portugal?
If you are an Individual in Portugal, here is how you can reduce your taxable rental income by 50%:
You must be a self-employed individual classified under category B of the IRS with organized accounting.
The property must be used for business activity.
Once the legal conditions are met, the tax exemption will be reflected in the Model 3 tax return, through Annex C, by deducting 50% of the property income.
