The new Mais Habitação law includes a measure that allows owners of Alojamento Local properties to become exempt from paying IRS income tax until 31st December 2029 if they cancel the AL registration and place the property on the long-term rental market.
The current Government obviously wants to encourage as many properties as possible to stop being used for short-term tourist rentals (Alojamento Local) and become permanent residences via the long-term rental market.
So, in order to become exempt from paying income tax (IRS) or company profit tax (IRC) on long-term rental contracts, the text of the Mais Habitação law approved by Parliament and the President states the following (Note: it is still possible, but unlikely, for these conditions to change before the law comes into effect):
- the property has to have been registered as Alojamento Local before 31st December 2022
- the long-term rental contract must be signed and registered with Finanças before 31st December 2024
- the property must be the primary residence of the new tenant
If all the above conditions are met, the owner of the property becomes 100% exempt from paying tax on the rental income until 31st December 2029.