NEW 25% TAX RATE WILL BE APPLIED TO ALL RENTAL INCOME FROM 2023

by | Mar 15, 2024 | Fiscal, Mais Habitação, Owners, Rentals

Finanças has confirmed to the Lusa press agency that the new 25% income tax rate will be applied to long-term rental income for the entire year of 2023, and not just for income received after the Mais Habitação law was passed on 7th October 2023.

They have also confirmed that the new income tax rate will be applied even when the rental contract duration is less than 5 years.

There are certain conditions to obtaining the 25% rate:
– it has to be a residential rental contract
– if lower rates were available due to the previous legislation, these lower rates will be maintained until the end of the contract, or the next renewal date, whichever occurs first
– contracts of 5 years or more benefit from even lower tax rates as explained in this post
– the taxpayer doesn’t use the “englobamento” process, where all income is taxed at the same rate. This is because normally rental income is taxed at a separate rate, called a taxa autónoma, or autonomous tax. However, in certain cases, for lower rents, taxing all income at a unique rate using “englobamento” may be beneficial.

Information taken from the following Idealista article, in Portuguese:

https://www.idealista.pt/news/imobiliario/habitacao/2024/03/15/63217-taxa-de-irs-de-25-aplica-se-a-totalidade-das-rendas-de-2023