With the residential rental market under heavy pressure across the country, especially in the south, the new Simplified Affordable Rental Regime (RSAA) emerges as an extremely powerful tax tool for private landlords and real estate companies. This model, which comes fully into force on September 1, 2026, definitively replacing the old Affordable Rental Program, offers an unbeatable incentive: total (100%) exemption from personal income tax (IRS) or corporate income tax (IRC) on rental income earned.
Which contracts and entities can join the RSAA?
The RSAA was designed to be flexible and broad, allowing individual owners, commercial companies, and patrimonial funds wishing to place properties on the controlled rental market to join — with particular relevance for the Algarve given its strong real estate market. The regime covers:
- Direct residential lease contracts for permanent housing;
- Lease contracts intended for residential sublease;
- Direct residential sublease contracts;
- Contracts made under municipal or intermunicipal affordable rental programs (such as the housing networks of Loulé or Faro).
The regime is available both for new lease contracts and for express renewals of existing contracts, provided they are fully adapted to meet the new legal criteria.
How is the maximum rent limit calculated?
Unlike the general moderate-rent regime, the RSAA does not adopt a fixed overall cap (such as the general €2,300 limit). Under the Affordable Rental scheme, the maximum monthly rent is variable and depends on three combined factors:
- The property type (T0, T1, T2, etc.);
- The exact municipality where the property is registered;
- A cap set at no more than 80% of the median rent per square meter officially published by the INE (National Statistics Institute).
This means an apartment in Almancil or Quarteira (Loulé municipality) will have a substantially different maximum rent limit than a property of the same type located in a neighboring municipality. The specific characteristics of the asset and its geographic location determine the financial viability of the operation.
Duration and contractual stability
To safeguard the right to housing and ensure the zero-tax benefit, the legislator requires minimum periods of contractual stability:
- Permanent housing: Lease contracts must have a minimum mandatory term of 3 years.
- Temporary housing: Strategically allowed for university students or relocated professionals (e.g., in healthcare or education sectors), requiring a minimum duration of 3 months. The temporary purpose must be genuine and accepted under the regime — merely stating it formally in the contract draft is not enough.
The maximum tax benefit: IRS and IRC exemption
Correct validation of the contract under the RSAA ensures that rental income is fully exempt from taxation:
- For an individual landlord: Eligible rents become subject to a 0% IRS rate, generating massive net savings.
- For a company (legal entity): Rental income does not count toward taxable profit subject to IRC.
This major tax advantage must be carefully weighed through a financial simulation, comparing the tax saved against the rent reduction (the 20% below the INE median) required to qualify for the regime.
Formalities, deadlines, and Tax Authority (AT) oversight
Access to the exemption requires strict compliance with reporting and bureaucratic obligations. The owner must ensure the contract is properly executed, registered, and electronically communicated via the Finance Portal (Portal das Finanças), and must keep all documentation proving the property’s eligibility, the INE-based rent calculation, the property type, and the duration of the agreement.
Failure to comply with any requirement immediately disqualifies the contract from the moment of the breach, forcing the landlord to repay the tax owed retroactively, plus late-payment interest.
How URB LAW SERVICES protects the management of your rental
At URB LAW SERVICES, in Almancil, we ensure that the transition of your property to the Affordable Rental regime meets all legal security requirements. Our team assists with:
- Detailed eligibility analysis of the property and the contract;
- Precise determination and calculation of the legal rent limit based on INE indices;
- Careful drafting and review of lease and sublease contracts aligned with the RSAA;
- Tax framing under IRS or IRC and filing with the Tax Authority;
- Monitoring renewals and mitigating the risk of losing the exemption.
The exemption must be structured and prepared before the contract is signed. Subsequent changes to ongoing contracts are rarely accepted by the Tax Authority for retroactive benefit purposes.
Optimize your rental income with full legal security. Talk to URB LAW SERVICES in Almancil.
