As more and more tourists are visiting the Algarve annually it is worth considering renting your property as a way of reducing the annual costs of owning a holiday home.
If you are considering renting, then there are a number of issues that you need to be aware of in order to avoid any problems with the Portuguese licensing and tax departments.
Rental licenses (Licença de alojamento local)
The Decreto-Lei n.º39/2008 of 7 March and Portaria 517/2008 25 June states that properties which are rented out, but not licensed as a touristic development, require a Rental Licence. This license is available from the local council (Câmara) which has a number of requirements that need to be complied with but none of which are unduly onerous. The reasoning behind the licencing is to ensure the quality of accommodation for visitors to Portugal meets proper and acceptable safety and hygiene standards. The law has been enforced quite vigorously to date with ASEA (the overseeing body) carrying out spot-checks on rental agents to ensure that all properties that they have available for rent are properly licensed. With so many properties advertised on the Internet for holiday rental it is also an easy task for ASEA to review holiday rental sites to determine properties that are being rented that may not be registered with them.
How to obtain a rental license
These are issued, as stated previously, by the local Câmara and we would advise that you instruct your lawyer or property manager to arrange obtaining the proper licence for you. You will need to provide the following papers:
You will also need to ensure that the property is equipped with the following:
If the property is located in Portugal then Portuguese tax has to be paid on any income generated by the property. This applies even if the owner and the renter are based outside Portugal and if the rental is arranged without the assistance of a Portuguese-based agent.
The property owner is legally obliged to file an income tax return declaring the rental achieved during the year. Many expenses can be deducted from the gross income to arrive at the net taxable figure and these include: