Your Ultimate Guide to Renting Out Your Property in Portugal

Introduction to the Property Rental Market in Portugal

Portugal offers some of the most competitive gross yields in Western Europe. According to Confidencial Imobilario, locations with the highest and most stable rental yields include Lisbon (5.2 – 6.60 percent), Porto (5.9 – 6.60 percent), Algarve (5.6 – 8.0 percent), and Setúbal (7.3 percent).

Based on the latest research by the World Travel & Tourism Council (WTTC), tourism is a key driver of the Portuguese rental market, particularly in the short-term rental sector. Its total economic contribution was estimated to reach €62.7 billion in 2025, representing 21.5 percent of the national gross domestic product (GDP).

In Portugal, a housing shortage leads to high demand and an increase in property prices. The cost of residential property rose by 17.7 percent in October 2025, which was a 2.8 percent increase from September, stated Euro News.

While the average Portugal house prices vary from €1,903 to €4,935 per square meter, the rent you collect can pay off the cost of the property much faster than in other European capitals, such as London, Paris, or Bern.

If you are just starting out and wondering how long does it take to buy a house in Portugal to then rent out, you’ll be pleased to know that it can take as little as a month to successfully purchase a property in Portugal, usually taking between one and four months.

The Impact of Zoning and Local Municipal Policies

If you’re planning to rent out a property in Portugal, the first thing to know is that not every area has the same rules. Some neighborhoods in Lisbon, like Alfama or Baixa, will let you rent long-term, but make Portugal short-term rentals tricky. In other tourist-heavy spots, such as Porto’s Ribeira, landlords face even stricter rules.

Therefore, we always recommend checking the official government portal (gov.pt) to start your application, but more importantly, you should also consult the local Câmara Municipal’s zoning maps. These city-level maps are the primary source for identifying active moratoriums or ‘containment zones’ that might not appear immediately on national platforms.

Municipal restrictions and moratoriums

Some cities and municipalities in Portugal have limits or temporary bans on new short-term rentals. Lisbon, Porto, and parts of the Algarve may restrict new AL license approvals due to high demand.

For example, when the rental-to-housing ratio reaches 10 percent in a specific area, the local councils can restrict or ban new AL licenses there. If you don’t comply with these rules, you may be subject to fines, license suspension, or legal consequences.

Whether you’re thinking about renting or buying a property, a buyer’s agent or a property finder in Portugal will consider your location and budget. They can offer valuable advice on any local restrictions, access to amenities, and regional transport.

What are the new rental laws in Portugal?

Under the State Budget 2026, the Portuguese government has proposed multiple housing measures that can benefit landlords, investors, and property developers. These new rental laws combine financing supports with tax incentives and regulatory changes.

Here is a quick look at the key measures that affect property investors:

• Lower taxes for landlords: The proposal reduces the standard IRS tax rate from 25 percent to 10 percent for properties leased at moderate rates (up to €2,300 per month). This applies to both new and existing contracts and is effective through 2029. However, the measure still requires promulgation and publication before it comes fully into force.
• AIMI exemption: Residential properties rented out at moderate rents are expected to be exempt from the Additional Municipal Property Tax (AIMI). This change could encourage landlords to keep their rents within moderate rates. However, the measure is part of the draft budget law and not yet fully effective.
• Simple licensing procedures: The Portuguese government is aiming to reduce problems with bureaucracy and shorten deadlines to make it easier for property developers to launch new projects.
• Higher IMT rate for non-residents: The draft 2026 budget law proposes a higher municipal tax on Onerous Real Estate Transmissions (IMT) of 7.5 percent for non-residents who buy a home in Portugal.
• Capital gains tax exemption: Homeowners who sell a property and reinvest their proceeds into acquiring, building, or renovating a new one for moderate rent housing may be exempt from the capital gains tax in Portugal.

A Step-by-Step Guide to Renting Out Your Property in Portugal

To rent out property in Portugal, you must obtain a NIF number (Número de Identificação Fiscal), register the lease with the Portuguese tax authority, and issue electronic receipts. The step-by-step guide below can help you get started.

Step 1: Decide the type of rental

Determine whether you will use your Portuguese real estate investment for long-term or short-term rentals.

If you rent your property for an extended period to families, couples, or single tenants and don’t offer additional services, such as guest check-ins, cleaning, or property maintenance, then your investment is a regular rental.

Modern apartments near business districts often perform better as long-term rentals, especially in major cities like Lisbon, Porto, or Faro.

If you rent your property for shorter stays to tourists or locals and offer services such as cleaning, maintenance, or guest check-ins, then your property falls under the Alojamento Local category.

Coastal areas and popular tourist destinations, such as the Algarve, can offer lucrative investments in luxury real estate.

If you are considering buying property in Portugal, real estate agents work on behalf of the seller and will secure a higher commission for a higher sale. A buyer’s agent works solely on behalf of you, the buyer, ensuring your best interests are met.

Step 2: Obtain an Alojamento Local (AL) license (short-term rentals only)

If you plan to offer short-term or holiday rentals, you must register your property as Alojamento Local (AL) with the local municipality.

You register the property on the Portuguese tax portal. When renting to tourists via Airbnb or Booking.com and providing services like cleaning or laundry.

According to Article 151º from the Portuguese tax authorities, you can register your rental activity using one of the following:

• CAE 55201 (Furnished accommodation for tourists): This is the most common code for renting out furnished apartments, holiday homes, houses, or villas.
• CAE 55204 (Other short-stay accommodation): This is a code for guesthouses or hostels where you can rent out individual rooms.
• CAE 55202 (Tourism in rural areas): You can use it specifically for properties in designated rural zones or converted farmhouses.

Every registered AL property must have a fire extinguisher, a fire blanket, a first-aid kit, and emergency signs in place in case of an emergency.

It is also mandatory to have an official complaints book (Livro de Reclamações) for your guests.

Step 3: Appoint a fiscal representative (non-residents)

If you are not a Portuguese tax resident and live outside the EU or EEA, you need a fiscal representative in Portugal. They take care of all the tax filings and notices with the Portuguese tax authorities.

If you are a tax resident, which means you pay taxes in Portugal on your worldwide income, you don’t need fiscal representation.

If you are a non-resident with a Portugal NIF number and have a home address outside the EU or EEA, you must appoint a fiscal tax representative. This applies even if you obtained your NIF for the purpose of applying for a Golden Visa, opening a bank account, or purchasing property.

When renting in Portugal as an American, it’s important to follow the Portuguese law. As a non-resident outside the EU/EEA, your NIF number must be linked to a fiscal representative. Most Americans hire a representative, like an accountant or a real estate lawyer in Portugal.

Step 4: Determine rental prices

One of the most critical decisions a landlord or property manager faces is setting the rent price. The ideal rate factors market demand with profitability, attracting tenants, and maximizing income.

To set the right price, you need:

• Market analysis: Income levels, job growth, or regional business expansions can affect rental prices. A buyer’s agent or a real estate agent in Portugal can provide information on vacancy rates, rent trends, and regional market surveys.
• Compare similar properties: Choose a neighborhood and look at the prices of properties with a similar size, amenities, location, and condition.
• Find your unique selling points (USPs): Think of the factors that separate your property from your competition. It could be a unique architecture, design, popular location, swimming pools, or outdoor space.

If you are looking for the most popular places to rent, check our guide on renting in Portugal.

Step 5: Get your documents in order

Before you can list your property, make sure you have all the required property documentation in Portugal, such as:

• Property registration documents
• Energy certificate
• Habitation license
• AL registration certificate (if applicable)
• Portuguese tax number (NIF)

Incomplete documentation can delay rentals or result in penalties during inspections.

Step 6: Prepare and sign the rental contract

For long-term rentals, you must sign a written rental contract. The contract needs to clearly state how long the lease lasts, the amount of the rental payment, the rental deposit, who handles property maintenance costs in Portugal, and how either party can end the agreement.

You also need to register the rental agreement with the Portuguese tax authorities and make sure all rent payments can be tracked for tax purposes.

Step 7: Manage bookings and tenants

Managing tenants involves much more than just collecting rent. You need to handle maintenance issues as they come up, manage check-ins and check-outs for short-term stays, stay in regular contact with tenants, and make sure everyone follows house rules and local laws. For this reason, many owners hire companies that help with rental property management in Portugal.

Step 8: Issue official electronic invoices for all rental income

All rental income in Portugal must be invoiced using official electronic receipts issued through the Portuguese tax portal. This affects both long-term and short-term rentals. Failure to issue proper invoices can result in fines and tax audits, making this step essential for legal compliance.

Reporting and Paying Taxes on Rental Income

When you earn income by renting out property in Portugal, you pay taxes under the IRS (Portugal’s personal income tax). Tax rates vary depending on your residency status and whether the property is rented for short-term or long-term use.

Income Tax IRS

In Portugal, IRS (Imposto sobre o Rendimento das Pessoas Singulares) is the personal income tax you pay on your annual earnings. For property owners, your rental income falls into two categories:

• Category F (passive rental income): This is the standard category for long-term contracts. The standard tax rate is 25 percent for residential properties and 28 percent for commercial properties. As of 2026, a new incentive reduces the standard rate to 10 percent for moderate properties rented at moderate prices (up to €2,300 monthly rent).

• Category B (business or professional income): This category is used for Alojamento Local (AL) or short-term holiday rentals (Airbnb style). If you’re running an AL (Airbnb style), you can use the Simplified Regime, where the government assumes 65 percent of your income goes to expenses and only taxes the remaining 35 percent. Alternatively, you can choose Organized Accounting, which offers deductible expenses, but this requires a certified Portuguese accountant to manage your books.

A buyer’s agent like Goldcrest can introduce you to a local tax advisor so you can report your income, avoid missed deadlines, and penalties. Check our ultimate guide to learn more about property taxes in Portugal.

Stamp duty (Imposto do Selo)

When you register a new lease on the Portal das Finanças, you must pay a one-time stamp duty equal to 10 percent of one month’s rent. You pay it once at the start of the contract. This is a one-off tax, not a recurring monthly charge.

IMI (Municipal Property Tax)

Property owners pay an annual IMI tax. The rate varies from 0.3 percent to 0.8 percent, and it is based on the property’s taxable value, not its market price. You pay it once per year or in instalments, depending on the amount.

IMI applies whether the property is rented or not. However, these are deductible expenses if you use Organized Accounting.

VAT (IVA)

VAT does not usually apply to standard long-term rentals, but it can apply to short-term rentals (Alojamento Local) if services are included.

VAT may apply if you offer:

• Cleaning during the stay
• Linen changes
• Reception or concierge services
• Breakfast or similar extras

Because rental taxes in Portugal depend on residency status, rental type, and accounting regime, many landlords work with Portuguese accountants to accurately report rental income and pay the correct amount of tax.

Choosing the Right Property Renting Service in Portugal

Choosing the right property renting service in Portugal can significantly streamline your experience as a landlord, saving you time, hassle, and money in the long run.

Look for a property renting service Portugal that offers:

• Licensing and legal support
• Tax filing and invoicing assistance
• Tenant screening and property management
• Transparent fee structures

A reliable rental service helps ensure compliance, protects your investment, and maximizes rental returns, especially if you are a foreign property owner who manages their rentals from abroad.

You can find out more in our article: How to find a property manager in Portugal?

Goldcrest: How We Can Help You 

Goldcrest is a buyer’s agent that is based in Lisbon. We provide expert, impartial advice on real estate investments and how to buy property in Portugal. From scouting out the perfect property through to property acquisition, we have you covered throughout the process.

If you are looking to purchase property in Portugal, don’t hesitate to get in touch. Our team of skilled experts is available to solve all your real estate doubts, helping you with the property search and offering insightful expertise and strategic advice.

Why choose Goldcrest?

• Local knowledge: With offices located across Portugal, our presence nationwide allows us to assist you personally across the country.
• Independent service: As an independent buying agent, we do not represent any development or project. Our service is entirely tailored toward each individual client, providing you with everything you need to secure the perfect property at the best possible price. As an impartial advisor on the market, we work solely on behalf of our client and provide a service tailored to your needs and requirements.
• Streamlined process: Our real estate agents speak English and Portuguese, and our service is completely focused on providing you with a hassle-free buying experience, saving you time.
• Experienced team: Our expert real estate team has a vast local knowledge of the Portuguese property market. We have cutting-edge technology and metasearch tools at your disposal to provide full market coverage, ensuring the best investment choices and negotiated prices.
• Network of partners: We have a close network of partners, including lawyers, property management services, builders, architects, designers, and landscape gardeners, again saving you time and hassle by providing you with trusted experts in their field of work.