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Renting Out Your Property

Lagos Homes specializes in assisting property owners in navigating Portugal's rental market, providing expert advice on short-term and long-term rental strategies.


With our profound knowledge of local trends and demand, we customize solutions to maximize your property's rental potential. From effective marketing to meticulous tenant selection, we ensure your investment yields optimal income with minimal stress.

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Initial Steps to Rent Out

1. Property: If you haven't found the right one, use our Search to start 

2. Tax ID: You need a Portuguese NIF number to purchase and rent out your property

3. Compare: Decide between long-term or short-term rentals

4. Taxes: No matter which option you pick, you have to declare your rental income in Portugal, non-residents need to hire a tax consultant


Long-Term Rentals

In Portugal, a long-term rental typically refers to a lease agreement with a duration of six months or more. However, the specific definition may vary depending on local regulations and rental market practices. Generally, long-term rentals offer tenants more stability and security, allowing them to establish a temporary home for an extended period. Landlords benefit from steady rental income and reduced turnover costs associated with shorter leases. Additionally, long-term rental agreements often provide legal protections for both landlords and tenants, outlining terms related to rent increases, property maintenance, and lease termination.

Steady vs. Less Income

Long-term rentals typically provide a stable and predictable income stream, making financial planning easier.

However, it generally generates less income compared to short-term rentals, as the rental rates are usually lower and there may be fewer opportunities for peak-season pricing.

Lower Maintenance vs. Potential Wear

With long-term tenants, there may be lower turnover, reducing the need for frequent maintenance and repairs.

However, there is still the potential for gradual wear and tear over time.

Reduced Turnover vs. Limited Flexibility

Long-term rentals often have reduced turnover, meaning fewer vacancies and less time spent marketing the property between tenants.

On the other hand, long-term leases offer limited flexibility for landlords, as they are locked into fixed rental terms and may have to wait longer to make changes or adjustments.

Tax Advantages vs. Non-Payment

In Portugal, long-term rentals can benefit from reduced tax rates compared to short-term rentals.

Despite legal protections, there is always a risk of non-payment from long-term tenants, which can lead to financial losses and potential eviction proceedings.


Short-Term Rentals

Short-term rentals in Portugal involve leasing a property for brief periods, catering to transient guests seeking temporary accommodation. To operate legally, landlords must obtain an Alojamento Local (AL) license, ensuring compliance with local regulations. While short-term rentals offer flexibility and the potential for higher rental income, landlords must manage frequent turnover and maintain the property to meet guest expectations.

Higher Income vs. Seasonal Fluctuations

Short-term rentals typically command higher rental rates, especially during peak tourist seasons, allowing landlords to maximize income potential.

However, short-term rental income may fluctuate seasonally, with lower demand and rental rates during off-peak periods.

Individual vs. Furnishing Costs

Individually and stylishly furnished rentals can lead to higher rental prices and increased property value.

However, furnishing and outfitting a short-term rental property can involve significant upfront costs for furniture, appliances, decor, and amenities, which may impact profitability and return on investment.

Flexibility vs. High Turnover

Short-term rentals offer greater flexibility for landlords, allowing them to adjust rental rates, terms, and availability more frequently to capitalize on market trends and maximize occupancy.

On the downside, short-term rentals often experience higher turnover rates, requiring landlords to invest more time and resources.

Guest Reviews & Potential Damage

Short-term rentals rely heavily on guest reviews and ratings to attract new guests and maintain a positive reputation, which can lead to increased bookings and higher occupancy rates.

At the same time, short-term rentals pose a higher risk of property damage or misuse by guests, requiring landlords to implement strict guest screening.

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Alojamento Local (AL)

In Portugal, renting out property for short-term stays requires obtaining an Alojamento Local (AL) license, a legal requirement imposed by local authorities. This license ensures that rental properties meet specific standards for safety, hygiene, and comfort, ensuring a positive experience for guests.


To streamline the registration process, many property owners find it easiest to hire one of our experienced lawyers, who can expertly navigate the intricacies of AL license applications and ensure compliance with all legal requirements.


Alojamento Local

Types of Alojamento Local (ALs) in Portugal

Tourists visiting Portugal have various options for accommodation under the Alojamento Local (AL) system. These options cater to different preferences and needs, including:

  1. Residences: Autonomous buildings with a single-family character.

  2. Apartments: Autonomous fractions of a building or part of an urban building for independent use.

  3. Lodging establishments (e.g., hostels): Accommodation units with up to 9 rooms or up to 30 clients, integrated into autonomous fractions.

  4. Rooms: Accommodation consisting of up to 3 rooms within the owner's property.

Requirements, Registration, Inspection

Operating an AL in Portugal involves fulfilling specific requirements, registering the property, and undergoing inspections to ensure compliance. The key steps include:

  1. Confirming eligibility: Check if the property is in an authorized AL zone and obtain approval from the condominium board if applicable.

  2. Opening an independent activity: Register the AL as an independent contractor with the Portuguese Tax and Customs Authority.

  3. Registering the AL: Submit a registration application, including documentation like proof of ownership and property use, to the municipal council.

  4. Subscribing to insurance: Take out compulsory civil liability insurance to cover fire risks and property damage to guests.

  5. Municipal council inspection: Undergo a mandatory inspection to verify compliance with AL requirements, including safety, hygiene, and guest amenities.

Lagos Homes can assist property owners at every stage of the AL registration and compliance process, ensuring a smooth transition into the short-term rental market.

Costs & Taxes

Operating an Alojamento Local (AL) in Portugal entails various tax obligations and costs. These include:

  1. Issuing Invoice Receipts: AL operators must issue invoice receipts (recibos verdes) through the AT Portal or pass invoices for their services.

  2. Value-Added Tax (IVA): If annual income exceeds €10,000, AL operators are obligated to pay a 6% tax on invoiced amounts. Submission of periodic quarterly declarations is required once this threshold is surpassed.

  3. Personal Income Tax (IRS): AL operators are subject to personal income tax on their rental income.

  4. Extra IHRU Tax: As of July 2023, an additional 15% tax may apply to AL properties located in high-density regions.


2024 Update

The year 2024 brings significant updates to Alojamento Local (AL) regulations in Portugal, reflecting efforts to address the country's housing crisis through the 'Mais Habitação' program. Key changes include:

Map of Portugal's municipalities with AL license restrictions offered by real estate buyers agent Lagos Homes German realtor to purchase property in Portugal
  1. Ban on New AL Licenses in High-Density Municipalities: High-density municipalities, primarily located along the coastline and in the Algarve, will no longer issue new AL licenses. However, low-density municipalities and autonomous regions such as Madeira and the Azores are exempted. Exceptions may be granted by district administrations for individual municipalities in high-density regions.

  2. Tax Exemptions for Existing ALs: Owners who transition existing AL properties to the rental market will enjoy tax exemptions on property income (IRS) and property tax (IMI) until 2030.

  3. Extraordinary Levy for Continuing AL Operations: Owners opting to retain their properties as ALs will be subject to an extraordinary levy of 15% to the Institute of Housing and Urban Rehabilitation (IHRU). This additional tax does not apply to ALs located in interior regions.

  4. Impact on Existing Licenses: Existing AL licenses remain unaffected by the regulatory changes.

* White denotes municipalities where new AL licenses are banned, while blue signifies interior municipalities still permitting new AL licenses without extra levies on existing properties. © Portuguese Government

It's important to note that these measures target single apartments in domestic buildings, rather than houses exclusively dedicated to tourist renting. These adjustments aim to strike a balance between promoting tourism and addressing housing availability and affordability concerns in Portugal. As these regulations evolve, staying informed and seeking professional guidance can help AL operators navigate the shifting landscape effectively.


At Lagos Homes, we provide assistance and connect you with knowledgeable partners to ensure compliance and success in the ever-changing AL market. Stay informed with our blog updates covering the latest changes to the AL license and the Mais Habitaçao program.

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