Tax Benefits and Tax Residency

Did you know that the exemption on rental income earned from properties previously used for short-term rentals also applies to non-residents?

Law No. 56/2023, of October 6, introduced Article 74-A into the Tax Benefits Code as a way of boosting the housing market. To that end, the law provides an incentive to convert apartments used for short-term rentals into permanent housing rentals.

To qualify for this exemption, all of the following requirements must be met:

i) The income must result from the conversion of a property previously used for short-term rentals into a permanent housing rental;

ii) The short-term rental property must have been registered for that purpose by December 31, 2022;

iii) The lease agreement and its registration on the Tax Authority system (Portal das Finanças) must have taken place by December 31, 2024.

This exemption will apply to real estate income earned through December 31, 2029.

Since this regulation pertains solely to the intended use of the properties, the tax residency of their owners is irrelevant, and non-resident citizens may also benefit from this tax exemption.