A new requirement introduced late last year also raised concerns for property investors. The Portuguese government decided to crack down on short-term rental licences, known as Alojamento Local (AL) in Portugal.
Now, with the aim to “balance the interests of property owners, investors and residents, while decentralising decision-making and correcting previous regulatory missteps”, the new government has introduced new changes to the AL legal framework. These are the four key changes:
• Reversal of the CEAL tax
The government has eliminated the 15% extraordinary contribution on AL properties (CEAL), a highly controversial measure from the Mais Habitação package. This revocation is retroactive to December 31, 2023, removing a significant financial burden from property owners in this sector.
• Reversal of the depreciation coefficient
The building age coefficient, previously used to calculate the Municipal Property Tax (IMI) for holiday rental properties, has been revoked, reducing the tax burden on these properties.
• Reduced powers for condominiums
Condominium associations can still oppose holiday rentals in residential buildings, but their objections must be based on proven disturbances. Additionally, the final decision on revoking AL permits now lies with the municipal council, which may encourage negotiation rather than immediate cancellation.
• Introduction of a dispute mediator
The government has introduced the possibility of appointing a mediator to handle disputes between residents, AL owners and condominium associations and propose solutions. While currently optional, the Portuguese Association of Condominium Management wants to make this role mandatory in areas with high AL activity.
The reversal of the short-term rental restrictions follows the government's decision to revise the tax incentives for overseas property investors who are salaried or self-employed, in its efforts to continue to attract skilled professionals and international investment.
It's good news for those considering buying to rent or even rent out their property when they're not using it. It's just one of the reasons why investing in real estate in Portugal is still an excellent option. Contact Algarve Home Sales for more information.
