Lisbon Tenants' Association Proposes Major Overhaul of Rental Tax Deductions for 2026 State Budget
The Associação dos Inquilinos Lisbonenses (AIL), the Lisbon Tenants' Association, has formally presented a package of fiscal and regulatory proposals to the Portuguese Government and the Assembly of the Republic for inclusion in the State Budget for 2026. The association, which submits proposals annually, is intensifying its call for measures it deems essential for providing relief to tenants and regulating the nation's housing rental market. The AIL noted that past proposals have been largely overlooked, with the exception of a minor adjustment to the rent deduction limit.
Central to the AIL's fiscal demands is the universal application of rent deductions in the personal income tax (IRS). The association is calling for the elimination of the current framework that excludes rental contracts signed before 1990 from certain benefits, arguing that this discrimination is no longer justifiable as these rents have also been subject to regular increases. The proposal seeks to allow all tenants, regardless of their contract's date, to deduct rental expenses. Furthermore, the AIL is demanding an increase in the deduction percentage from the current 15% to a minimum of 20%, citing the continuous and sharp rise in rental prices across Portugal.
The proposals also include raising the upper limit of the deduction to a value equivalent to two times the Indexante dos Apoios Sociais (IAS), the national Social Support Index. Another significant measure proposed would permit tenants to deduct expenses for authorized maintenance and repair work carried out on a property when the landlord fails to do so, mirroring the tax benefits currently available to property owners. The AIL asserts that these measures would be fiscally viable, suggesting that increased tax revenue from rising rents and a higher number of declared rental contracts would accommodate the changes without destabilizing public accounts.
In its submission, the AIL referenced the significant rental price inflation over the past three years, with an accumulated increase of 11.65% (6.94% in 2024, 2.16% in 2025, and a projected 2.25% for 2026), as a key justification for the proposed fiscal adjustments. The association stated that the financial burden on tenants now frequently exceeds 50% of their income, creating an unsustainable situation for many families and young people.
Beyond the tax-focused measures, the AIL reiterated its call for broader market regulation, referencing a list of 30 urgent measures it approved in May. Among the most pressing is the proposed creation of a Plataforma Nacional de Registo do Arrendamento, a National Rental Registration Platform. This mandatory registry, modeled after the existing system for Alojamento Local (short-term rentals), would require all property owners, agents, and operators to register any property being leased or offered for lease. The association also advocates for the establishment of a dedicated supervisory authority to enforce regulations within the rental market.
Additional proposals include the implementation of universal and mandatory rent and multi-risk insurance schemes to replace what the AIL describes as abusive guarantee practices like excessive security deposits and fiancés. The association also calls for distinct legislation for residential and non-residential leases, a concerted effort to bring tens of thousands of vacant public and private properties into the rental market, and the introduction of a rent control mechanism linked to the property's Valor Patrimonial Tributário (taxable asset value).
The AIL's document paints a stark picture of the Portuguese rental market, describing it as "deregulated, dysfunctional, unstable, precarious, and even clandestine," and criticizes what it calls the "beneplácito das políticas públicas" (the blessing of public policies) that has allowed this situation to persist. The association's comprehensive proposals will now be subject to review by the government and parliamentary groups as they begin deliberations for the 2026 State Budget.
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