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How rental income is taxed in Portugal: rates and calculation

A landlord pays IRS on rents, but only on the net income and at a rate that can fall from 28% down to 5% depending on the contract.

3 min readReviewed By Thorben Rasmus IdelReviewed by Nahar Geva

TL;DR

The rents from a let property are taxed under IRS in Category F. The tax is charged on the net income (rents minus deductible expenses such as IMI, condominium fees, conservation works and insurance) and applies an autonomous rate fixed by law: 28% for non-residential lettings and, for housing, from 25% down to 5% depending on the contract length (the longer the contract, the lower the rate). Alternatively, the landlord can opt for aggregation and pay the progressive IRS rates. Rents are reported in Anexo F.

What is rental income tax?

When you let a property and receive rents, that money is income and so it pays IRS. Rents fall under a dedicated bracket of the tax, Category F (property income)1. The good news is that you do not pay tax on everything you receive: the law lets you deduct several expenses and applies a special rate that can be much lower than the one on your salary.

You can estimate your own case, line by line, with the rental income tax calculator.

What is the tax charged on?

IRS on rents is charged on the net income, that is:

Taxable income = rents received in the year − deductible expenses

The expenses you incurred to obtain or maintain the rents are deductible2:

  • The property's IMI and the additional AIMI.
  • Condominium fees.
  • Conservation and maintenance works (with invoices).
  • Insurance and other running costs of the property.

Not deductible are mortgage interest, furniture and appliances, and works that increase the value of the property (those count later, in the capital gains on a sale).

What is the rental income tax rate?

Rents have a special (autonomous) rate, separate from the progressive rates on employment. For residential lettings, the rate falls the longer the contract, to encourage stable tenancies3:

Contract typeRate
Residential, up to 5 years25%
Residential, 5 to 10 years15%
Residential, 10 to 20 years10%
Residential, 20 years or more5%
Non-residential (shops, offices)28%

Worked example

Suppose you let a flat for €800 a month (€9,600 a year), on a 3-year residential contract (25% rate), and during the year you paid €1,200 of deductible expenses (IMI, condominium fees and insurance):

  • Taxable income: 9,600 − 1,200 = €8,400.
  • IRS (25%): 8,400 × 0.25 = €2,100.
  • You keep: 9,600 − 1,200 − 2,100 = €6,300.

The tax is about 21.9% of the gross rent. On a 5-to-10-year contract (15% rate), the IRS would fall to €1,260. Test your numbers with the rental income tax calculator.

The alternative: aggregation

Instead of the autonomous rate, the landlord can opt for aggregation: add the net rents to the rest of their income (employment, pensions) and pay the progressive IRS rates1. This option usually pays off for people on low incomes or with large deductible expenses, because the first rates of the IRS table can be below the autonomous rate. On medium or high incomes, the autonomous rate is generally better. Our calculator estimates the autonomous taxation, which is the default.

Where are rents declared?

Rents are reported in Anexo F of the Modelo 3 IRS return, stating the rents received, the deductible expenses and the contract details (including the length, which sets the rate)1. The landlord must also issue the electronic rent receipt on the Portal das Finanças whenever a rent is received.

Do I pay Social Security on rental income?

No. A private landlord's rents are property income and pay IRS only, with no Social Security contributions. This changes only for those who let property as a business activity (Category B). If in doubt about your specific situation, consult a certified accountant or the Portal das Finanças.

Common mistakes

  • Thinking you pay IRS on all the rent received

    The tax is charged on the net income. Before the rate is applied, the eligible expenses (IMI, condominium fees, conservation, insurance) are deducted, which lowers the taxable base.

  • Using your employment tax bracket

    Rents have their own special (autonomous) rate, from 28% to 5%. It is not your salary's marginal rate, unless you voluntarily opt for aggregation.

  • Ignoring the contract length

    For housing, a longer contract sharply lowers the rate: from 25% (up to 5 years) to 15%, 10% and even 5% (20 years or more). Declaring the correct length in Anexo F is what secures the reduced rate.

Frequently asked questions

How is tax on rental income calculated in Portugal?
Add up the rents received in the year, deduct the eligible expenses (IMI, condominium fees, conservation, insurance) and apply your contract's rate (from 28% to 5%) to that net income. IRS = (rents − expenses) × rate.
What is the rental income tax rate?
For residential lettings, the autonomous rate falls with the length: 25% up to 5 years, 15% from 5 to 10 years, 10% from 10 to 20 years and 5% from 20 years. For non-residential lettings it is 28%.
Which expenses can I deduct from rent?
The expenses incurred to obtain the rent: IMI and AIMI, condominium fees, conservation and maintenance works (with invoices), insurance and other property costs. Mortgage interest, furniture and works that increase the property's value are not deductible.
Is it worth opting for aggregation of rents?
It can pay off on low total incomes or with large deductible expenses, because the first progressive IRS rates may be below the autonomous rate. On medium or high incomes the autonomous rate is usually better.
Where do I report rental income for IRS?
In Anexo F of the Modelo 3 IRS return, stating the rents received, the deductible expenses and the contract details, including the length, which sets the rate.
Do I pay Social Security on rental income?
No. A private landlord's rents are property income (Category F) and pay IRS only. It is different for those who let property as a business activity (Category B).

Related reading & calculators

Sources

  1. 1.Article 8 of the IRS Code, property income (Category F) — Autoridade Tributária e Aduaneira / Portal das Finanças · retrieved 8 Jun 2026
  2. 2.Article 41 of the IRS Code, deductions from property income — Autoridade Tributária e Aduaneira / Portal das Finanças · retrieved 8 Jun 2026
  3. 3.Article 72 of the IRS Code, special rates and reductions by contract length — Autoridade Tributária e Aduaneira / Portal das Finanças · retrieved 8 Jun 2026

Author / Reviewed by

Author

Thorben Rasmus Idel

Founder & writer

Co-founder of Calculadora Capital. Writes the methodology and verifies the math behind every page.

Reviewed by

Nahar Geva

Co-founder & reviewer

Co-founder of Calculadora Capital. Reviews the methodology and verifies the math behind every page.

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