Portugal: Worked Example of Tax on Rent
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Tax Example: Rent
| Non-resident couple's joint monthly rental income1 | €1,500 | €6,000 | €12,000 | |
| Annual Rental Income | 18,000 | 72,000 | 144,000 | |
| Less Costs (3%)2 | (540) | (2,160) | (4,320) | |
| Less Depreciation (Capital Allowance)3 | – | – | – | |
| Less Municipal Property Tax (IMI)4 | (1,563)5 | (6,923)6 | (14,400)7 | |
| = Taxable Income | 15,897 | 62,917 | 125,280 | |
| Income Tax Rates | ||||
| Flat Rate | 15% | 2,385 | 9,438 | 18,792 |
| Annual Income Tax Due | €2,385 | €9,438 | €18,792 | |
| Tax Due as % of Gross Income | 13.25% | 13.11% | 13.05% | |
Thanks to: |
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DISCLAIMER: The information contained above is marketing material only and is not written tax advice directed at the particular facts and circumstances of any person and should not be relied upon. We encourage you to discuss your particular situation with us or an independent tax advisor. This information was last updated on October 10, 2006.
Notes
1 The property is jointly owned by husband and wife.
2 In these cases, the costs are estimated to be around 3% of the gross rental income.
3 According to domestic tax legislation, the cost-of-purchase depreciation is not deductible against rental income.
4 The Municipal Property Tax (IMI) rates currently vary between 0.2% and 0.5% of the tax registered value of the properties. In these cases, the maximum IMI rate is used for the computation.
5 The property is valued at €312,500. (IMI = €312,500 * 0.5% = €1,563)
6 The property is valued at €1,384,615. (IMI = €1,384,615 * 0.5% = €6,923)
7 The property is valued at €2,880,000. (IMI = €2,880,000 * 0.5% = €14,400)
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