Someone asked me this week whether now was the moment to put their place on a long let. They had read two things and merged them into one.

The first is real. Rental income taxed at 10% instead of 25%, as long as the rent is at or below €2,300 a month. That has been law since January. It is backdated to rents you have already collected this year, it covers contracts you already have, and it applies whether or not you are resident here.

The second is the one filling the headlines this month: landlords freed from the 2% cap on rent rises. That one is not law. The government approved it on 9 July, but it still needs a parliamentary vote and the backing of either the Socialists or Chega. Neither has said which way they will go. The Socialists have called it an auction.

One of those you can act on today. The other might never happen.

Steve

The monthly rent that decides whether you pay 10% or 25%.

It is the same figure everywhere in Portugal, not adjusted by council or property type. At or below it, your rental income is taxed at 10% rather than 25%. On a €2,000 a month flat in Lagos that is €2,400 of tax instead of €6,000. Call it €3,600 a year. One thing worth knowing: €2,300 is not a number someone picked. It is 2.5 times the 2026 minimum monthly wage, and the law lets the government revise it, so it will not sit at €2,300 forever.

Six conditions have to hold at once, and this is where people lose it. You must own personally rather than through a company. The contract must be registered with the tax office. The property must be someone's permanent home. The contract must comply with NRAU. The rent must be at or under €2,300. And the income has to be declared in Annex F, table 4.2. Holiday and AL lets do not qualify at all, so this is a fork between long-let and short-let income rather than a bonus on top.

On that first condition, an important clarification. If you hold the property through a company you do not get the 10%, because IRS is a personal tax and a company does not pay it. But you are not shut out. Under the same law, companies, and individuals with organised accounting, count only 50% of the rent for IRC purposes, on the same €2,300 ceiling and running to the same 2029. Different mechanism, same intent. If you own through a structure, ask your accountant about that route rather than assuming there is nothing here for you.

A word on NRAU, since it is the condition people gloss over. It stands for Novo Regime do Arrendamento Urbano, the 2006 law that sets the rules for urban tenancies in Portugal. In plain terms it means a proper written residential lease drawn up under the current rules, not a handshake, not a holiday-let agreement dressed up as a long let, and not an old pre-1990 contract. If you are not sure which you have, that is worth ten minutes with whoever drew it up.

Worth understanding how the two changes fit together, because they point the same way. The tax break makes long letting cheaper. The repeal, if it passes, would remove the thing that keeps a lot of owners out of long lets in the first place: the fear that once you are in, you are stuck below market with no way to adjust at renewal. Take that away and a long let stops being a one-way door.

But the tax break has a hard edge at €2,300, and that edge creates a dead zone. At €2,300 you keep 90% of the rent, which is €24,840 a year. At €2,400 you keep 75% of the whole lot, which is €21,600. You would have to get all the way to roughly €2,760 a month before you beat simply charging €2,300. Everything in between is a pay cut you have given yourself. If the repeal passes and you are tempted to move to market, that is the line to know before you move it.

Sources: Decreto-Lei n.º 97/2026 of 20 May, article 45.º-C of the Estatuto dos Benefícios Fiscais (the 10% rate and the 50% IRC inclusion, with effect from 1 January 2026 and running to 31 December 2029) and article 2.º (the moderate-rent limit, set at 2.5 times the 2026 minimum monthly wage); Council of Ministers, 9 July 2026 (the rental reform, approved but not yet voted in parliament). General commentary, not tax advice. Your own position depends on your circumstances, so confirm with your accountant before acting.

Most owners I speak to have never checked all six conditions, and some have been sitting on this since January without claiming it. Reply and tell me what you are charging and what kind of contract you are on. I will tell you straight whether you look like you are in or out, and where it is an accountant's question rather than mine.

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