Measure carries over from last government
People who are not resident in Portugal but who have transferred residential property that they own out of the market for short-term rentals – classed as Alojamento Local (AL) under Portugal’s tourism rules – and into that for permanent housing can benefit from tax exemptions on rental income provided for in law, the country’s Tax Authority (AT) has clarified.
At issue is a tax benefit created as part of the previous, Socialist government’s Mais Habitação (More Housing) legislative package, under which rent from property that had previously been registered and allocated to AL by December 31, 2022, and which have since been converted to residential rental, are exempt from personal or corporate income tax until the end of 2029.
For this exemption to apply, a rental contract must have been signed and registered on the AT portal by December 31, 2024.
The aim of this tax break, granted within the time limits mentioned, was to encourage the transfer of property from the short-term rental market to the housing market. It applies to both resident owners and non-residents, whether foreign or Portuguese nationals living abroad, according to the AT in its reply to an owner who does not live in Portugal and sought clarification on this point.
“From reading the rule, and the respective framework within the scope of Law no. 56/2023, of 06/10 (Mais Habitação), we can conclude that it is intended to encourage the transfer of properties under the AL regime to the permanent housing rental market, and that to this end it provides for a temporary and exceptional regime of exemption from IRS and IRC taxation,” states the AT in its written response, now published, to the request for binding information.
The authority adds that “since the rule is intended to encourage the transfer of apartments in ‘alojamento local’ to permanent residential rental, the fact that the owners of the properties are residents or non-residents is completely irrelevant, since the properties and the use to which they are put are at issue, and not the residence of their owners.”
Lusa
