Changes in Renting In Portugal 2023
...Or How Much Can My Landlord Increase My Rent In 2023
Historically, renting an apartment in Portugal has favored tenants. However, things are changing due to the economic climate and the Portuguese government is putting changes in place that will affect both landlords and tenants. Here is what you need to know to prepare for new rental prices and increases in 2023.
How Much Can My Portuguese Landlord Raise My Rent in 2023
If you are wondering how much rents in Portugal will rise in 2023, you’re not alone. Rents in Portugal have been increasing at incredibly rapid rates. This, along with 9% inflation had pundits predicting much higher rates of increases in rents. Below you will find more information on just how much you can expect your rent to go up in 2023.
Antonio Costa announced that, for most lease agreements, landlords will only be able to increase your rent by 2% at the end of the contract when you renew. This is the biggest increase that has been put in place in quite some time (9 years).
It was supposed to be a much bigger increase, 5.43% due to the high rate of inflation (9%), but the government decided this would be too much for those residing in Portugal.
This 2% increase applies to home rental contracts written before 1990 and commercial rent contracts written before 1995. These are currently under a rent freeze that will go to May of 2023.
Tax Benefits For Landlords in Portugal in 2023
Landlords were pretty miffed at the reduced increase. The government stepped in, and landlords will receive a tax benefit to make somewhere between 9-30% of property income tax free when it comes to IRS and also 13% when it comes to IRC (Corporate Income Tax).
According to Antonio Costa, this is enough to make up the difference between the 5.43% and 2%, so landlords are expected to reap the same fiduciary rewards.
If you are a landlord who has a current contract with a tenant that was signed before the end of 2021, which is being taxed at the current rate of 28%, or at the special rates (10-26%), you will receive this tax break benefit. However, as noted, the rate is fluid depending on a few things:
28% tax rate
- 9% of your rental property earnings will be tax free.
26% tax rate*
- 10% of your rental property earnings will be tax free
10% tax rate*
- 30% of your rental property earnings will be tax free
*For the special rates of 10-26%, the tax breaks kick in when the lease contract is valid between 2-5 years, or the lease contract is valid for more than 20 years.
What types of rental contracts do not qualify for tax exemptions?
- Contracts were signed in 2022.
- Homes in affordable rent contracts.
- Homeowners of low income.
Important Facts About Renting In Portugal
The cost per square meter for renting a house in Portugal increased from 10.8 euros/m2 to 11.6 euros/m2 between January to August 2022.
The price of rent in Portugal increased by 7.4% in the past 8 months.