IRS rates on rental income in 2026
Rental income is category F income. By default it pays a flat ("autonomous") rate on the taxable base: rent minus deductible expenses. The rate depends on the type of lease, the rent and the length of the contract.
| Lease | Rate | Legal basis |
|---|---|---|
| Non-housing lease (shop, office, warehouse) | 28% | Art. 72 of the IRS Code |
| Housing, general regime | 25% | Art. 72 of the IRS Code |
| Housing with rent up to €2,300/month (rent from 2026 to 2029) | 10% | Art. 45-C of the EBF (Decree-Law 97/2026) |
| Permanent housing, 5 to 10-year lease | 15% | Art. 72 of the IRS Code |
| Permanent housing, 10 to 20-year lease | 10% | Art. 72 of the IRS Code |
| Permanent housing, lease of 20 years or more | 5% | Art. 72 of the IRS Code |
| Lease under the RSAA (affordable rent scheme) | 0% | Decree-Law 97/2026, since 1 September 2026 |
When several rates apply, the lowest one wins. Art. 45-C of the EBF sets 10% "unless a more favourable rate applies": a 20-year lease with a €900 rent pays 5%, not 10%. The RSAA and the 10% rate are alternatives, they do not add up. The full regime, with the steps to secure the lowest rate, is in the guide landlord IRS in 2026.
Deductible expenses: what counts and what does not
You deduct the costs actually paid to earn or secure the rent of each property, with an invoice and proof of payment (art. 41 of the IRS Code).
- Count: IMI on the let property, condominium fees, insurance (including rent guarantee insurance) and repairs and maintenance, including work done in the 24 months before the lease if the property had no other use.
- Do not count: mortgage interest, depreciation, furniture and appliances, comfort or decoration items and the AIMI surcharge.
The full list, with the proof to keep for each expense, is in the Anexo F deductions guide.
Flat rate or aggregation?
With the flat rate, the taxable base pays the lease's rate whatever your other income. With aggregation (englobamento), the rent is added to your other income (salary, pension) and taxed on the progressive IRS scale. The calculator measures the extra tax the rent causes and recommends the cheaper option.
| Taxable income in 2026 | Marginal rate |
|---|---|
| Up to €8,342 | 12.5% |
| €8,342 to €12,587 | 15.7% |
| €12,587 to €17,838 | 21.2% |
| €17,838 to €23,089 | 24.1% |
| €23,089 to €29,397 | 31.1% |
| €29,397 to €43,090 | 34.9% |
| €43,090 to €46,566 | 43.1% |
| €46,566 to €86,634 | 44.6% |
| Over €86,634 | 48% |
- Aggregation can pay off when your other income is low and the lease's rate is 25% or 28%: the rent falls into the first brackets.
- With the 10% rate or lower, it rarely does: the first bracket is already 12.5%.
- For joint filers, the couple's income is split in two before applying the scale.
Opting for aggregation may require you to aggregate other income of the year and affects tax credits and the minimum-income safeguard: check with an accountant before ticking it.
Renting to a company: withholding tax
When the tenant is a company with organised accounts, it withholds IRS every month on the gross rent: 25% as a rule, 10% on rent covered by art. 45-C of the EBF (art. 101(1)(e) and (f) of the IRS Code). Withholding is an advance: it is deducted from the tax worked out in your return. Because it applies to the gross rent while the tax applies to rent minus expenses, you may get a refund.
To get the 10% rate with a company tenant, the home must be the residence of a named person and the lease must ban subletting and any business use. The conditions and the clause checklist are in the guide renting to a company.
Deadlines and Anexo F
- During the year: issue the electronic rent receipts and keep the expense invoices, property by property.
- Lease registered with the AT: make sure the lease is registered with the tax office (see how).
- From 1 April to 30 June 2027: declare your 2026 rent in Anexo F of the Modelo 3 return (art. 60 of the IRS Code): rent, expenses, withholding and, if it pays off, the aggregation option.
For information only, not tax advice. Sources: IRS Code (arts. 41, 60, 68, 68-A, 69, 72 and 101), Law 73-A/2025 (2026 State Budget), Tax Benefits Statute (art. 45-C) and Decree-Law 97/2026 of 20 May. Last reviewed: 7 October 2026.