Step 6: Investing and Renting Out Property in Portugal

November 16, 2025•6 min read

Step 6: Investing and Renting Out Property in Portugal

Portugal is not only a beautiful place to live — it’s also a great place to invest. Many Canadians buy homes in Portugal for vacations, retirement, or as a smart way to earn rental income.

Whether you plan to rent short-term to travelers or long-term to local residents, Portugal has strong demand and many opportunities.

Why Invest in Portugal

Portugal is known for warm weather, safety, friendly people, and a high quality of life. Millions of tourists visit each year, which makes it one of the top places in Europe for rental homes.

Other reasons to invest include:

strong rental demand in Lisbon, Porto, and the Algarve
affordable home prices compared to other parts of Europe
a stable economy with clear property laws
tax benefits for foreign buyers and residents

Many Canadians see Portugal as both a lifestyle upgrade and a smart long-term choice.

Short-Term vs. Long-Term Rentals

Before renting out your home, it’s important to choose the rental style that fits your goals.

Short-Term Rentals (like Airbnb or holiday homes)

Short-term rentals work well in popular vacation areas.
They can earn higher income during busy seasons.

For short-term rentals, you must get a special license called an AL License (Alojamento Local). This license allows you to rent legally to tourists.

Short-term rentals often involve:

more frequent guests
cleaning between stays
more day-to-day management

Long-Term Rentals

Long-term rentals are easier to manage and give steady income all year.
These rentals follow normal Portuguese rental laws.

Long-term rentals may be a good fit if you want stability and fewer guest changes.

Your real estate agent can help you choose the best option based on your property and location.

Taxes and Licenses

If you rent out your property, you must:

register your rental income with the Portuguese tax office
pay income tax on your rental earnings
get an AL License if doing short-term rentals

A local accountant or lawyer can guide you through each step so everything is done correctly.

Working With a Property Manager

If you don’t live in Portugal full-time, a property manager can be very helpful.
They can:

handle guest check-ins and check-outs
arrange cleaning and repairs
collect rent
pay bills
look after the home

This gives you peace of mind knowing your property is cared for while you’re away.

Keeping Your Property in Good Shape

A well-maintained home is easier to rent and keeps its value over time.
Simple habits help, such as:

regular cleaning
quick repairs
checking appliances and systems
keeping the home safe and welcoming

Good care protects your investment and makes guests or tenants happier.

Start Building Your Investment in Portugal

Whether you want a vacation home, a full-time move, or a rental property, Portugal is a wonderful place to invest. With the right help, you can find a home that fits your goals and enjoy both the lifestyle and the rewards.

Full 8-Step Series Recap (All Steps)

Here are all 8 steps in the full Portugal buying journey, with links to each guide:

Full guide to Step 1: NIF for Canadians Buying Property in Portugal

Full guide to Step 2: How Canadians Can Open a Bank Account in Portugal

Full guide to Step 3: Best Areas in Portugal for Canadian Buyers

Full guide to Step 4: The Legal Process of Buying Property in Portugal for Canadians

Full guide to Step 5: Moving and Settling in Portugal for Canadians

Full guide to Step 6: Investing and Renting Out Property in Portugal

Full guide to Step 7: Residency and Golden Visa Options for Canadians

Full guide to Step 8: What Life in Portugal Is Like for Canadians

FAQs: Investing and Renting Out Property in Portugal

Is Portugal a good place for Canadians to invest in real estate?

Yes. Portugal offers strong rental demand, affordable home prices compared to other parts of Europe, a stable economy, clear property laws, and appealing tax benefits. Many Canadians see it as both a lifestyle upgrade and a smart long-term investment.

What’s the difference between short-term and long-term rentals in Portugal?

Short-term rentals cater to tourists and can earn higher income during peak seasons, while long-term rentals provide stable, predictable income year-round. The best option depends on your goals, property location, and how hands-on you want to be.

Do I need a special license for short-term rentals like Airbnb?

Yes. Short-term rentals require an AL License (Alojamento Local). This license makes your rental legal and allows you to advertise to tourists on platforms like Airbnb and Booking.com.

Is it difficult to get an AL License?

It depends on your municipality and building regulations. Some areas are more restrictive than others, especially in major cities. A lawyer or local consultant can help you check eligibility and complete the application.

Do long-term rentals require a license?

No. Long-term rentals follow standard Portuguese rental laws and do not require an AL License. They are typically easier to manage and involve fewer turnovers.

How is rental income taxed in Portugal?

All rental income must be reported to the Portuguese tax office. Tax rates depend on whether your rental is short-term or long-term, and whether you are a resident or non-resident. An accountant can help you calculate your tax obligations and keep everything compliant.

Do I need a property manager if I don’t live in Portugal?

It’s highly recommended. A property manager can handle bookings, guest check-ins, cleaning, repairs, rent collection, and bill payments. This ensures your property is cared for while you’re away.

Can Canadians buy a home in Portugal and rent it out right away?

Yes — as long as the property meets local rules and you obtain the necessary licenses for short-term rentals. Long-term rentals can usually begin immediately once you’re ready.

Which areas in Portugal are best for rental income?

Lisbon, Porto, and the Algarve traditionally offer the strongest demand for both short-term and long-term rentals. Coastal regions and tourist areas also perform well throughout the year.

Is it expensive to maintain a rental property in Portugal?

Maintenance costs are generally reasonable. Regular cleaning, small repairs, appliance checks, and seasonal upkeep help protect your investment and keep your property attractive to guests and tenants.

Can I manage my rental property from Canada?

Yes, but only if you hire a reliable property manager. They serve as your local contact, keep the property running smoothly, and ensure your tenants or guests have a positive experience.

What should I consider before choosing short-term vs. long-term rentals?

Think about your income goals, how much time you want to spend managing the property, whether you plan to use it personally, and the rental rules in your area. Your real estate agent can help you determine the best strategy.