Portugal Rental Income Tax for Foreign Landlords: Americans, Britons

Rent from a home in Portugal is rental income (category F) under the personal income tax code, the IRS, and it is taxed at a flat autonomous rate: 25% on housing rent and 28% on other rent, with cuts for long leases and, from 2026, a 10% rate for rent below a cap. This applies to a landlord who lives abroad as well as to one who lives in Portugal; the main difference is whether you may add the rent to your other income instead.

This guide gives what the Portal das Finanças and the Diário da República say about that tax on the day we read them. It is not tax advice, and we work out no amount for you. If you are still choosing a tenant or a lease, our guide to renting a home in Portugal and our guide to the rental contract and tenant rights cover the lease itself. The taxes on owning the property, IMI and AIMI, are in our guide to Portuguese property taxes, which we do not repeat here.

What counts as rental income in Portugal, and how is it taxed?

Article 8 of the IRS code defines category F income: “as rendas dos prédios rústicos, urbanos e mistos pagas ou colocadas à disposição dos respetivos titulares”, rents of rural, urban and mixed properties paid or made available to their owners, unless the owner chooses to be taxed under category B (business income). The article counts as rent the use of the property or part of it and related services, the hire of machinery and furniture fitted in the property, the difference a sub-landlord earns, and compensation for lost rent. The Portal das Finanças FAQ adds that a deposit (caução) is rental income too, and must appear on the rent receipt.

Taxation is by flat rates in article 72, summarized in the next table. Rent is not on the list of income subject to final withholding in article 71, so the landlord declares it and the tax is assessed on the return.

What are the rates for rental income?

Three conditions come with the long-lease cuts. If the lease ends earlier than its term for a reason that is the landlord’s fault, the cut is lost from the start of the lease or renewal, and you declare the fact in the year it ends so the difference can be settled, with compensatory interest (paragraph 20). The cuts in paragraphs 3 to 5 do not apply to housing leases signed from 1 January 2024 whose monthly rent exceeds by 50% the general rent limits by type of home and municipality in Portaria 176/2019 (paragraph 23). And a new lease gets 5 further percentage points off if its rent is at least 5 percentage points lower than the previous rent on the same property (paragraph 24). The Portal das Finanças FAQ says that for a lease that qualifies for a cut, you tell the tax authority its duration in the Portal in the first year it qualifies, and again when it is renewed. The FAQ’s own example gives 15 February of the following year for the first notice and the end of February for the renewal; check the date on the Portal.

What is the 10% rate that started in 2026?

Decree-Law 97/2026 of 20 May 2026 added article 45-C to the Tax Benefits Statute. It sets an autonomous rate of 10% on rental income from leases “destinados exclusivamente ao arrendamento para habitação” (used only for housing) when the monthly rent does not exceed the limits in paragraphs 2 and 3 of article 2 of the decree-law, for income earned up to 31 December 2029, “salvo quando seja aplicável uma taxa mais favorável” (unless a more favorable rate applies). Article 18 of the decree-law says it takes effect from 1 January 2026, so it covers rent for 2026.

The cap is the “renda mensal moderada”, 2.5 times the monthly minimum wage for 2026. The decree-law does not state the cap in euros, and we did not look for the figure in force, so work it out from the current minimum wage and confirm it with the tax office. It also says the limit may be updated by order (portaria), and we did not look for one, so confirm the current figure. The rent counted is the total paid for the property under the lease, plus the value of movable goods, equipment or accessory parts and of services that add to its value (article 3 of the decree-law), and for a lease the annual amount divided by the months elapsed in the year. The pages we saved do not say how the cap applies with several tenants.

The pages do not say that the 10% rate depends on where the landlord lives. Article 101 of the IRS code was amended in the same decree-law to add a 10% withholding rate for category F income under this rule.

Does it matter whether I am resident or non-resident?

For the tax itself, much less than for the paperwork. Article 15 says residents are taxed on all their income, including income earned abroad, and non-residents only on income obtained in Portuguese territory. Article 18 counts income “respeitantes a imóveis nele situados” (from property located there) as obtained in Portugal, so rent from your Portuguese home is taxed in Portugal in both cases. Whether you are resident turns on the tests in article 16, which our guide to Portuguese tax residence explains.

On aggregation, the Anexo F instructions say rent is taxed at the article 72 rates, but residents of Portugal may opt to add it to their other income and be taxed on the general scale of article 68. Article 22 says the option binds you to aggregate all your category F income. For a non-resident, article 72, paragraph 15 lets a resident of an EU state, or of an EEA state with an exchange of tax information, ask for the rate of the general scale on rent, with, under paragraph 16, all income taken into account, including income obtained outside Portugal. The pages do not give this choice to a resident of the United States, or of the United Kingdom, which is no longer an EU state; our Brexit guide for Britons covers that change. The pages do not say what an American or a Briton resident elsewhere can ask for, so our reading, not the tax office’s, is that the flat rate is the one to expect unless the tax office tells you otherwise.

Article 130 requires a non-resident with income subject to IRS to appoint a person or company resident in Portugal to represent them before the tax authority, and the appointment is made when you register or update your tax number. For residents of EU and EEA states it is optional. Our guide to the Portuguese NIF explains the tax number and the representative.

If you become resident part way through a year, article 57 says you file one return for each residence status, with the usual exemptions.

Which expenses can I deduct from the rent?

Article 41 lets you deduct, for each property or part of a property, “todos os gastos efetivamente suportados e pagos” (all costs actually borne and paid) to obtain or secure the rent, including rent insurance. The costs it excludes:

• financial costs, such as mortgage interest
• depreciation
• furniture, appliances and comfort or decoration items
• the AIMI, the additional property tax

Other rules on the page:

• For a flat in a condominium, the mandatory condominium charges you actually pay are deductible; for several flats in one building they are split by each flat’s share of the building (paragraphs 2 and 3).
• IMI and stamp duty paid in a year are deductible only if the rent from that property is taxed that year (paragraph 5).
• Costs of conservation and maintenance paid in the 24 months before the lease starts are deductible if the property was not used for anything else in between (paragraph 7).
• On a sublease, the difference between the rent you receive and the rent you pay gets no deduction (paragraph 6).
• Costs must be proved by documents (paragraph 9); the Portal das Finanças FAQ names an invoice or an invoice-receipt.
• Paragraph 8 allows a landlord who moved more than 100 km from the let property to deduct the rent paid for the new home, up to the rent received, if the let property was the owner’s permanent home for at least 12 months before the lease and both leases are registered with the tax authority.

When a deposit is returned to the tenant, the FAQ says a discharge receipt (recibo de quitação) is issued for the refund, without naming who issues it, and that its amount is entered as an expense in Anexo F.

How do I declare the rent: receipts, Modelo 44 and Modelo 3?

There are three steps.

1. Register the lease. The FAQ says a lease signed after 1 April 2015 is reported by the Stamp Duty form, Modelo 2, which also registers it in the tax authority’s database; for an older lease, you register its minimum elements (parties’ tax numbers, the property, type and purpose of the lease, start date, rent and how often it is paid) in the Portal.
2. Issue an electronic rent receipt each time rent is received. The Portal das Finanças says landlords must issue the receipt when they collect the rent, even as a deposit or advance, in the “Recibo de Renda Eletrónico” function, choosing the lease, the period and the date received. The page does not use the term e-Fatura de renda. A receipt can be cancelled until the end of the Modelo 3 deadline for the year it covers. Exempt from the receipt: landlords aged 65 or over on 31 December of the previous year, rural leases, and landlords who meet all three of these conditions: no electronic mailbox, and rent received the previous year of no more than twice the IAS or, if you received no rent that year, rent expected this year of no more than that limit (the FAQ gives the 2026 IAS as 537.13 euros). Exempt landlords who do not choose to issue receipts file Modelo 44, the annual declaration of rent received, by the end of February.
3. File Modelo 3 with Anexo F. Article 60 sets the period: 1 April to 30 June of the year after the income, electronically. The Portal das Finanças leaflet says non-residents who earn income in Portugal not taxed by final withholding, rent and capital gains, file this return, and that Anexo F carries all the category F income earned in Portuguese territory. Rented property goes in table 4.1, or table 4.2 for a permanent-housing lease that qualifies for a long-lease cut. The Anexo F instructions we read are those on the Portal, with a file date of February 2025; Portaria 104/2026/1 of 5 March 2026 is listed on the Portal das Finanças rent receipts page as approving the models and instructions; we did not read it, so check the current form. Option for aggregation is marked in the section of the form headed “Opção pelo englobamento”.

Where the tenant is an entity that keeps, or must keep, organized accounts, article 101 says it withholds 25% (10% under the new rate) when it pays.

What about my US or UK tax on the same rent?

A Portuguese rental does not take you out of your home country’s tax. Both pages below are short, and neither is about Portugal.

Americans. The IRS says a U.S. citizen or resident alien abroad is “subject to tax on worldwide income from all sources” and must report all taxable income. Its Foreign Tax Credit page says that when you paid foreign tax on income also taxed in the U.S., you may take a credit or an itemized deduction, and that the credit is claimed on Form 1116. It also says the credit covers only the reduced amount when a treaty sets a lower foreign rate. See our guide to U.S. taxes from Portugal for the wider picture.

Britons. GOV.UK lists “rental income on overseas property” among foreign income that may be taxable in the UK. If you are UK resident you normally pay tax on foreign income; if you are not, you pay UK tax only on UK income. Where the same income is taxed in both countries, GOV.UK says you can usually claim Foreign Tax Credit Relief when you report the income on your Self Assessment return. For residence, see our guide to UK taxes and HMRC for Britons in Portugal.

Neither country’s page tells you which of the two taxes yours is, or how the Portugal and U.S. or U.K. tax treaties apply to your case. That is for a tax adviser.

What this guide does not cover

Capital gains when you sell the property, short-term and tourist lets, VAT, stamp duty on the lease, the tenant’s own deduction for rent paid, and business income under category B are separate subjects with their own pages. If you are still weighing a purchase, our guide to buying property in Portugal as a foreigner covers the steps.

Date of the information

The latest change we found is Decree-Law 97/2026 of 20 May 2026, which added article 45-C to the Tax Benefits Statute (the 10% rate) and changed article 101 of the IRS code; it applies from 1 January 2026, and this guide’s update date, 20 May 2026, is the date of the decree-law. Article 72 was last amended by Lei 73-A/2025 of 30 December 2025, which the page shows revoking paragraph 19 (we quote the rates as the page now reads); the long-lease cuts come from Lei 56/2023 of 6 October 2023, and article 41 was last amended by Decree-Law 57/2024 of 10 September 2024. Rates, caps and forms can change with each State budget.

Official pages read for this guide on 21 October 2026: articles 8, 15, 18, 22, 41, 57, 60, 71, 72, 101 and 130 of the IRS code and article 45-C of the Tax Benefits Statute on the Portal das Finanças, Decree-Law 97/2026 on the Diário da República, the Portal das Finanças pages on rent receipts and its rent FAQ, the Anexo F instructions and the leaflet on who files Modelo 3, the DGERT page on the 2026 minimum wage, the IRS pages on U.S. citizens abroad and the foreign tax credit, and the GOV.UK pages on tax on foreign income.