Portugal’s new Simplified Affordable Rental Regime, known as RSAA, is now in effect, creating a new tax incentive for landlords who make residential properties available within defined rent limits.
The regime took effect on 1 September 2026 under Decree Law No. 97/2026. Qualifying rental income can be exempt from Portuguese personal income tax, IRS, or corporate income tax, IRC.
For landlords and property investors, this changes the calculation when deciding how much rent to charge.
What is the new landlord tax exemption in Portugal?
Under the RSAA, rental income from qualifying residential rental, rental for residential subletting and residential subletting contracts can be exempt from IRS or IRC.
The exemption is not automatic. The property, rent and rental agreement must meet the conditions established under the regime.
The RSAA applies from 1 September 2026, and the necessary electronic platforms were required to be adapted by that date.
What are the maximum rent limits?
There is no single rent ceiling for the whole of Portugal.
The maximum monthly rent is determined by property type and is based on 80% of the median rental values published by the National Statistics Institute, INE, for the municipality where the property is located.
The rules can also take into account characteristics of the property, including energy efficiency and the availability of private parking.
This means landlords need to confirm the applicable limit for their specific property before assuming that a rental agreement qualifies.
How long does the rental contract need to be?
Contract duration is another important condition.
For a property rented as the tenant’s permanent residence, the rental contract must generally have a minimum duration of three years.
For qualifying temporary residence, the minimum contract period is three months.
The regime is therefore focused on residential rental rather than short term tourist accommodation.
What tax exemption is available?
Where the requirements are met, qualifying rental income is exempt from IRS for individuals and IRC for companies.
There is an important point for taxpayers who choose to aggregate rental income with their other income for IRS purposes. Although the qualifying rental income remains exempt, it is taken into account when determining the tax rate applicable to the taxpayer’s other income.
The individual tax position should therefore still be reviewed before deciding how to structure the rental.
Is there anything landlords need to submit?
Yes.
To benefit from the regime, landlords must submit information through the electronic platform provided by the Institute for Housing and Urban Rehabilitation, IHRU.
The landlord must provide a copy of the rental contract and proof that the contract was communicated through the Portuguese Tax Authority’s Portal das Finanças.
This submission must generally be made by 15 January of the year following the year in which the contract was signed.
The IHRU then communicates the qualifying contract to the Portuguese Tax Authority by the end of February. Once the requirements are satisfied, the tax treatment applies from the date the rental contract was entered into.
Could charging a lower rent result in a better return?
Potentially.
A landlord may be able to obtain a higher monthly rent on the open market but pay more tax on that income.
A lower rent that falls within the RSAA limits could qualify for the IRS or IRC exemption.
For this reason, landlords should compare the net result after tax, rather than looking only at the headline monthly rent.
The calculation may include the market rent, the qualifying RSAA rent, applicable taxation, financing costs, condominium fees, maintenance and other property expenses.
For some owners, the difference in tax treatment could change which rental strategy makes more financial sense.
What about rental contracts that already existed?
Contracts that were already operating under Portugal’s previous Affordable Rental Programme when the RSAA entered into effect maintain the tax benefits granted under the previous regime, subject to the transitional provisions.
Existing landlords should therefore check which regime applies to their contract before making any changes.
Are there other tax incentives for residential landlords?
Yes.
The legislation introduced several measures affecting residential rental income.
For certain residential rental contracts within the relevant rent limits, rental income earned up to 31 December 2029 may be subject to a 10% autonomous IRS rate, unless a more favourable rate applies.
For certain corporate taxpayers and individual taxpayers with organised accounting under Category B, only 50% of qualifying rental income may be taken into account for taxation.
These rules are separate from the full IRS and IRC exemption available under the RSAA, so it is important to establish which regime applies to each rental arrangement.
What should landlords consider now?
Property owners considering a new residential lease should review the applicable rent limit before setting the rent.
They should also confirm whether the proposed contract meets the minimum duration requirements, calculate the tax position under the RSAA and compare it with a standard market rental.
For international landlords, there may also be tax and reporting obligations outside Portugal depending on their country of tax residence.
The most appropriate approach therefore depends on the property, the rental agreement and the landlord’s wider tax position.
Final thoughts
Portugal’s new landlord tax exemption introduces another option for property owners deciding how to structure residential rentals.
From 1 September 2026, qualifying contracts under the RSAA can benefit from an exemption from IRS or IRC, provided the applicable rent limits, contract requirements and reporting obligations are met.
For landlords, the key point is that the highest monthly rent may not always produce the highest net return.
Reviewing the tax impact before signing a rental agreement can help determine which option makes the most sense.
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