Renting property? The Government could levy more tax
Overseas property investors who buy to rent out their properties could soon find themselves paying more taxes in Portugal.
Income from properties which currently may or may not included in IRS tax returns will soon be mandatorily included with other total family/household income.
However, it will all depend on the type of contracts and the total amount of income in each specific case.
For example, landlords who place their properties under the affordable rents scheme will be exempt from IRS on the income from their rental revenues.
At the moment each tax payer can opt to choose to lump in their different incomes from various sources and an evaluation will be made on their final amount of tax to be paid.
If, as expected, the Government chooses to scrap the present system, tax payers who pay current income tax above 28% will pay more income tax from their income from property rentals which until now is set at 28%.
The tax hike on property rental income was mooted this week by Portuguese Prime Minister, António Costa, but there are exceptions for those who place their properties out for rent at under the affordable rents regime or draw up renewable non-precarious contracts.
“But those who choose not to do so and can exercise their right not to, will probably be faced with paying higher taxes,” said the PM in parliament.