Taxation of property income in Portugal varies according to the type of lease, whether residential or non-residential.
Residential Leases
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Base IRS Rate:
The special autonomous rate applicable to property income from residential leases (entered into from 2024) is 25%, reduced from the previous rate of 28% (Art. 72, no. 2, of CIRS).
Note (Extraordinary Measure): For existing contracts in 2022 or renewed, if the rent does not increase more than 5.43%, the autonomous rate may be reduced to 20%.”
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Reductions by Contract Duration (Current Rule):
Long-term residential lease contracts benefit from reductions on the base rate (25%), with an initial reduction of 5 percentage points (20% rate) for contracts equal to or greater than 2 years (Art. 72, no. 5, of CIRS). From there, there are additional reductions:
- Contracts of 5 to 10 years: Additional reduction of 2 percentage points (total of 7% reduction, resulting in 18%).
- Contracts of 10 to 20 years: Additional reduction of 5 percentage points (total of 10% reduction, resulting in 15%).
- Contracts over 20 years: Additional reduction of 10 percentage points (total of 15% reduction, resulting in 10%).”
Non-Residential Leases
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IRS Rate:
Property income from non-residential leases (such as commercial leases) continues to be subject to the special autonomous rate of 28% (Art. 72, no. 1, of CIRS). This rate does not benefit from the reductions applicable to residential contracts.
These rates may be changed if the landlord opts to include property income with other income, in which case the progressive IRS rates apply. In addition, there are additional exemptions and reductions for specific situations, such as contracts under the Rental Support Program.