Rental income tax for non-resident owners in Portugal

If you own a flat in Portugal and live in Dublin, London, Amsterdam or Austin, the rent is taxed in Portugal first. The standard rate is 25% of the net rent. From 2026 a registered lease at a moderate rent can be taxed at 10%. Here is how it works, what you can take off, and what it looks like on a real number.

The standard rule: 25% on the net rent

Rental income (Category F) earned by a non-resident is taxed at a flat 25% on the net amount: gross rent minus the deductible costs below. There is no personal allowance and no progressive scale. You file the annual IRS return (Modelo 3, annex F) between April and June for the previous year, the same window as residents.

The 10% rate from 2026

Decree-Law 97/2026 of 20 May added article 45-C to the Tax Benefits Statute: rent from a residential lease of up to €2,300 a month is taxed at 10% on income received from 1 January 2026 to 31 December 2029. Conditions: the lease is for housing only, is communicated to Finanças, and you do not opt for aggregation. Existing contracts qualify and there is no minimum lease length (one law firm read a three-year minimum into an early draft; the enacted text ties three years only to the separate RSAA exemption). The law sets no residency condition. Confirm with your accountant on the first return, since the tax authority's forms and practice for non-residents were still being updated when this was written.

A separate scheme (RSAA) gives a full exemption on leases of at least three years at a rent 20% below the county median, also open in principle to non-residents.

Longer leases, lower rates

Outside the 2026 rule, and after it ends, the rate falls with the registered lease length: 25% under five years, 15% from five, 10% from ten, 5% from twenty. Each renewal that crosses a threshold moves you down. Early termination by the landlord brings the higher rate back with interest.

What you can deduct

• IMI (annual property tax) and the stamp duty paid on the lease.
• Condominium fees.
• Buildings insurance.
• Repairs, maintenance and conservation works, with invoices in your name and NIF.
• Energy certificate, lease registration costs.

Not deductible: mortgage interest, furniture and equipment (unless replacing worn items), your own travel, and works that add value rather than maintain it. Keep every invoice for four years.

Worked example: €1,500 a month, owner in the UK

The UK, Irish, Dutch and US treaties all let you credit the Portuguese tax against tax at home on the same income, so the 10% rate does not always lower your total bill. It lowers what Portugal keeps, and it removes the risk of paying 25% here and getting only partial relief at home.

US owners

Rental income goes on Schedule E in US dollars. Portuguese income tax on the net rent qualifies for the foreign tax credit on Form 1116. IMI and AIMI are deductible expenses, not credits; IMT, the purchase stamp duty, notary, registration and legal fees are not expenses at all but go into the property's cost basis, recovered through depreciation and on sale. Loan-related charges (mortgage stamp duty, appraisal, origination fees) stay out of basis and are deducted or amortised separately. Foreign residential rental property is depreciated over 30 years. A Portuguese bank account is reportable on the FBAR once your foreign accounts together exceed $10,000 at any point in the year.

What to do before the first rent arrives

1. Register the lease on the Finanças portal within the month after signing and pay the stamp duty (10% of one month's rent).
2. Issue electronic rent receipts (recibos de renda eletrónicos) every month from the portal. Tenants need them, and the tax authority matches them to your return.
3. Appoint a fiscal representative, or enrol in electronic notifications on the Finanças portal, if you live outside the EU or EEA. The tax office accepts either; without one of the two, notices go unread and the fines are real.
4. Keep invoices with your NIF for everything deductible.
5. Decide aggregation before filing: for non-residents it is almost never worth it.

Sources: Personal Income Tax Code articles 41 (deductions), 72 (autonomous rates and reductions for long leases) and 60 (filing window); Decree-Law 97/2026 of 20 May and EBF article 45-C; Stamp Duty Code, table item 2 (leases); Portugal's double taxation treaties with the UK, Ireland, the Netherlands and the US; IRS Form 1116 and FBAR instructions. Figures checked October 2026; confirm your case with an accountant.