Letting income can now be exempt from IRS

The regime, known by its Portuguese initials RSAA, was approved as Annex III to the May 2026 housing package and replaces the accessible letting programme created in 2019.

The exchange it proposes is straightforward. A landlord agrees to let residential property at a rent below the limit the regime sets, for the term it requires. In return, the income that letting produces is exempt from tax rather than taxed at 25%, or at the 10% reduced rate that applies to moderate rents outside the regime.

The step that is easiest to miss is administrative, and it is the one that decides whether the exemption exists at all. The landlord must submit the contract on the electronic platform run by the housing institute, IHRU, by 15 January of the year following the year in which the contract was signed. A contract signed in 2026 has to be submitted by 15 January 2027.

For a non-resident owner, the calculation is not only about the tax. A lower rent against a nil tax rate can leave more in hand than a market rent taxed at 25%, and it comes with a longer, more stable tenancy. Whether it does depends on the property, the market it sits in, and what the owner wants from it in five years — which is a conversation, not a table.