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Municipal incentives

Urban rehabilitation - Personal Income Tax benefit

Capital gains earned by Personal Income Tax (IRS) taxpayers resident in Portugal from the first sale of a property located in one of the following Urban Rehabilition Areas (ARUs) are taxed at an autonomous rate of 5%.

Income earned by IRS taxpayers resident in Portugal is taxed at 5% when it derives entirely from the rental of:
  • Properties located in an ARU, after the rehabilitation process is completed;
  • Rented properties subject to phased rent updates in accordance with Articles 27 and following of the Urban Rental Regime (Novo Regime do Arrendamento Urbano –  RAU/NRAU), after the rehabilitation process is completed.


Capital gains: the rehabilitation must target buildings located in an area of urban rehabilitation. Afterwards, said buildings need to be sold.

Rental income: the income must be entirely derived from rental of a building located in an area of urban rehabilitation. Additionally, said building must have been subject to rehabilitation in the terms foreseen under the Urban Rehabilitation Regime.

How to obtain

For the purpose of obtaining this benefit, the urban rehabilitation process in question needs to be recognized by the Municipality of Porto through the submission of a specific form.