Short-term or long-term rental? What your property earns
Compare the yearly net income of both models, after costs and an estimate of IRS (personal income tax). Change the figures: the result updates instantly.
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How we calculate
What goes into the calculation
The same fixed costs in both models, and the tax on each. The default figures are an example: a two-bedroom flat (T2) worth €250,000.
In both models: IMI (municipal property tax), condominium fees, insurance and maintenance.
Alojamento local: platform commission, cleaning, water, electricity and internet, and the manager if you have one.
Long-term: the agency fee, if you use one.
Taxes (estimate)
IRS depends on your situation: always check with an accountant before you decide.
Long-term (Category F): rents minus deductible expenses, at the rate you choose (25% under the general regime, reduced rates for moderate rents and long leases) or at your marginal rate if you opt for aggregation (englobamento).
Alojamento local (Category B, simplified regime): income × coefficient (0.35, or 0.50 in a containment area) × your marginal rate.
Not included: Social Security (Segurança Social), VAT, tourist tax, licensing and furniture.
Alojamento local or long-term: the differences that matter
Alojamento local (AL, Portugal's short-term rental regime) can earn more per night, but it depends on occupancy, needs active management and is subject to increasingly strict municipal rules. A long-term rental earns less per month, but it is more stable and almost passive.
Long-term
Alojamento local
Income
Stable, month after month
Higher per night, seasonal
Rules
NRAU (urban lease law) and Civil Code
Registration with the câmara municipal (town hall); limits in some areas
Management
Mostly passive
Bookings, cleaning, check-in, platforms
Main risk
Rent arrears
Low occupancy and rule changes
IRS
Category F, flat rate or aggregation
Category B, simplified regime or organised accounts
From gross yield to net yield
Listings show the gross yield: the yearly rent divided by the property's value. What you actually keep is much less.
Gross yield: one year's income ÷ property value.
Minus costs: IMI, condominium fees, insurance, maintenance and, for AL, the platform, cleaning and utilities.
Minus IRS: the rate of your regime, applied to the taxable base.
Minus risk: months without a tenant, empty nights or rent arrears.
Mortgage interest is not deductible from rental income, but it weighs on your result: take it into account separately.
IRS for each model
Long-term (Category F). The expenses incurred to earn the rent are deducted from it, such as IMI, condominium fees, insurance and upkeep and maintenance works; mortgage interest and furniture are not deductible (article 41 of the IRS Code). A flat rate of 25% applies to the result, or a reduced rate: 10% for rents up to €2,300 a month (income from 2026 to 2029) and 15%, 10% or 5% for leases of 5 to 10, 10 to 20 or more than 20 years. You can also opt for aggregation (englobamento), at your marginal rate. The details are in the landlord IRS guide.
Alojamento local (Category B). Under the simplified regime, only part of the income is taxed: 35% for a house or flat, 50% in a containment area (article 31 of the IRS Code). That part is added to your other income and taxed at your marginal rate.
The simulator does not include Social Security contributions, VAT or the tourist tax, which depend on your situation and the municipality. A certified accountant can do the full calculation.
Before choosing alojamento local
Check with the câmara municipal whether it accepts new alojamento local registrations in your area.
Add up the furniture, the equipment and the time you will spend on bookings and cleaning.
Test a cautious occupancy rate: market averages hide empty months.
When a long-term rental pays off
When you do not want to, or cannot, manage bookings and cleaning.
When your area restricts alojamento local.
When you can benefit from a reduced IRS rate, with a moderate rent or a long lease.
You can switch models later: to move to a long-term rental, you need a lease that complies with the NRAU and must report it to the Finanças (Tax Authority).
For information only, not legal or tax advice. Sources: IRS Code (articles 31, 41 and 72), Aluseg's landlord IRS guide.
Frequently asked questions
Frequently asked questions about rental yield
Which earns more, alojamento local or a long-term rental?
It depends on occupancy, the nightly rate and costs. Alojamento local earns more per night, but you pay for the platform, cleaning and utilities, and it needs day-to-day management. Use the simulator with your property's figures: the net difference is often smaller than it looks.
How is alojamento local taxed?
Under Category B of IRS. In the simplified regime, 35% of the income is taxed (50% in a containment area), added to your other income, at your marginal rate.
How much IRS does a landlord pay on long-term rents?
A flat rate of 25% on rents minus deductible expenses, or a reduced rate: 10% for rents up to €2,300 a month (income from 2026 to 2029) and 15%, 10% or 5% for long leases. You can also opt for aggregation (englobamento).
Which expenses can I deduct from rental income?
The expenses incurred to earn the rent, such as IMI, condominium fees, insurance and upkeep and maintenance works. Mortgage interest and furniture are not deductible (article 41 of the IRS Code).
Can I switch from alojamento local to a long-term rental?
Yes. You need a lease that complies with the NRAU and must report it to the Finanças. Before going back to alojamento local, check your municipality's rules.
Next steps
Made your choice? Continue the guide
Once you have chosen the model, prepare the property and set the right rent for the market.
Step 2
Prepare the property
Energy certificate, habitation licence, insurance and inventory.
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