Owners

Short-term rental (AL) or medium and long-term rental in Porto: contract, tax and what to compare

Published October 29, 2026 · David Demenashe · 5 min read

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The two models differ in three ways you can check in the law: the contract (guests under an AL registration, or a tenant under a lease), how the income is taxed, and how much work the property needs. Which one earns more depends on the property and on your tax position, so compare real numbers before you choose. Urbanis manages both.

The contract

An AL is a business that houses guests for short stays and needs its own registration, which our guide on registering an AL in Porto explains. A housing lease follows the Civil Code:

A fixed-term housing lease cannot be shorter than one year or longer than 30 years (article 1095(2)).
That minimum does not apply to leases for non-permanent housing or for special transitional purposes, such as work, education and training, or tourism, as long as the purpose is written in the contract (article 1095(3)). A job assignment of six months or a semester of study can therefore be covered by a shorter lease.
Unless the parties agree otherwise, these leases do not renew automatically (article 1096(2)).
For tourism purposes, only one such lease can be signed per calendar year for each unit or building (article 1095(4)).

Tax on rent

Rent from a housing lease is taxed at a flat 25% (article 72(2) CIRS). For permanent-housing leases, the rate is reduced by 10 percentage points for terms of 5 to under 10 years, by 15 points for 10 to under 20 years, and by 20 points for 20 years or more, which gives 15%, 10% and 5%. Each renewal of the same length adds 2 points off in the first band, up to 10 points. These reductions do not apply to leases signed from January 1, 2024 whose rent is more than 50% above the general rent limits for the municipality and typology (article 72(23)). A new lease gets an extra 5 points off if its rent is at least 5 points lower than the previous lease on the same property (article 72(24)).

Since 2026 there is a lower flat rate: Decree-Law 97/2026 of May 20 sets 10% on rent from leases exclusively for housing when the monthly rent does not exceed the moderate-rent limit, for income earned until December 31, 2029, unless a more favorable rate already applies (article 45-C of the Tax Benefits Statute, effective from January 1, 2026). The limit is 2.5 times the 2026 minimum monthly wage. With the minimum wage at 920 euros, that is 2,300 euros a month. The text speaks of leases exclusively for housing and does not mention permanent residence or a minimum term. It is recent, so check the Tax Authority's guidance for how it applies to your contract.

Tax on AL

For an AL in an apartment or house, the taxable amount is 35% of revenue (50% in a containment area), added to your other income and taxed at progressive rates (article 31 CIRS). Rent is taxed at a flat rate instead. Which is lower depends on your total income, so ask your accountant to run both. Our guide on AL taxes in Portugal has the details. On VAT, the rental of property is exempt, but lodging services in hotel or similar activity are outside that exemption (article 9(29) of the VAT Code).

Work and flexibility

A lease means one tenant and one monthly payment. An AL means guests, cleaning between stays, pricing and complaints, which is why most owners use a manager. An AL can be limited by the municipality: in containment areas, new registrations can be restricted (see our registration guide).

How to decide

Ask for the numbers both ways: net revenue after costs for the AL, and the rent and tax rate for the lease.
Compare them after tax, not before.
Check your plans: selling, using the property yourself, or needing it back in a year.
Confirm that the property can be registered as an AL where it is.

What Urbanis does

We have managed properties in Porto for 3 years: apartments for short-term rental, for medium and long-term rental, and buildings. For AL we offer two models, both with all premium services: 25% of net revenue, or a fixed monthly rent. See Urbanis Residences or read what a manager does for owners.

Frequently asked questions

Can I rent a home for less than a year in Portugal without an AL?

Yes, if the lease is for non-permanent housing or a special transitional purpose, such as work, education or tourism, and the purpose is written in the contract. For tourism purposes only one such lease per year is allowed for each unit (Civil Code, article 1095).

What tax do I pay on rent in Portugal in 2026?

The base rate is 25%. Permanent-housing leases of 5 years or more bring it down to 15%, 10% or 5%. Since 2026, rent up to the moderate-rent limit of 2,300 euros a month can be taxed at 10% until 2029.

What is the moderate-rent limit in 2026?

2.5 times the 2026 minimum monthly wage of 920 euros, which is 2,300 euros a month (Decree-Law 97/2026).

Which pays more, an AL or a long lease?

It depends on the property, the area and your tax position. We prepare both numbers for your property so you can compare them after tax.

Related guides

Urbanis manages short-term, medium-term and long-term rentals and buildings in Porto. Tell us about your property and we prepare both numbers.

See Urbanis Residences

Sources: Civil Code, articles 1095 and 1096 (Diário da República), IRS Code, article 72 and article 31 (Portal das Finanças), Decree-Law 97/2026 (Diário da República, article 45-C of the Tax Benefits Statute), DGERT, minimum monthly wage 2026 and VAT Code, article 9. Texts consulted on October 29, 2026. Rules change, so check the current wording before you decide.

This article is general information, not legal or tax advice, and does not replace guidance from a professional on your specific case.