The Government wants to reduce the income tax rate from 25% to 10% on all lease agreements, new and existing, provided they have rents at moderate prices, i.e., up to €2,300. And now it has been clarified that the measure may be applied regardless of the term of these contracts, also covering short-term ones.

This is one of the measures in the government's tax package that was presented last week and still needs to obtain parliamentary approval to come into effect. The Ministry of Infrastructure and Housing has now clarified that this reduction in income tax to 10% on property income applies to lease agreements with a minimum term of one year, as provided for in the Civil Code, writes Jornal de Negócios.

Short-term leases are also covered, such as "contracts for non-permanent housing or for special temporary purposes, namely for professional, educational and training or tourist reasons," according to the same newspaper. This includes cases of students and teachers who are relocated, or people who rent a house temporarily for health reasons, among other reasons that must be identified in the contract. Once a year, owners can enter into a contract for special temporary purposes for tourist reasons.

The new simplified affordable housing regime (RSAA) – in which rents must be 20% below market value and landlords are exempt from income tax – also allows temporary residences for special temporary purposes, provided that the tenant has tax residence in a municipality different from the rented property and that the contract has a minimum term of three months (renewable if the temporary purpose remains). In other cases, rental contracts must be for permanent housing and have a minimum duration of three years.