Do you want to start renting out your properties or already do so, but are unsure about what you need to do to comply with the law? We provide you with a complete guide to renting (long or medium term) with step-by-step instructions on everything you need to do to legalize your rental.
Step 0 (before renting): Issue the Energy Certificate
According to Decree-Law No. 118/2013 of August 20, the issuance of an energy certificate is mandatory if you intend to rent your property. The energy certificate must be presented to the tenant at the time of signing the lease agreement.
Step 1: Lease Agreement and Property Inspection
When you rent out your property, you must have a written lease agreement that proves the rental.
The clauses included in your lease agreement will depend on the terms of the rental. However, the minimum clauses that contracts must contain are: Identification of the parties; the object of the lease (the entire property or the room); the purpose of the lease (in the case of student leases, it will be a temporary residential lease agreement); the term of the agreement; the amount of rent and security deposit; if expenses are included, or a ceiling is set for them, this must be included in the agreement. You also need to decide whether or not to require a guarantor. If there is a guarantor (third party), three copies signed by all three parties are required.
When signing the contract, make sure you inspect the house and attach the inventory list to the contract. This list should include the condition of the property and its contents.
Step 2: Security deposit
When signing a lease agreement with your tenant, you must take into account the possibility that the tenant may not comply with the agreement, may stop paying rent, may leave the property early, or may cause damage to it. The security deposit serves as a guarantee to protect you from situations like this and is provided for by law in Article 1076 of the Civil Code.
Step 3: Registering the Lease Agreement on the Finance Portal
Landlords are required to report lease agreements, or changes and terminations thereof, through the Finance Portal. The process for registering a lease agreement is simple and can be done entirely online on the Finance Portal.
All you need to do is log in to the Finance Portal with your tax identification number (NIF) and password and then select the option “Start of contract.” On that screen, you will see a form that you must fill out with all the requested information. Learn how to fill out the lease agreement registration form on the Finance Portal here.
Finance Portal > Citizens > Submit > Rental > Notify start of contract
It is important to note that this notification must be made by the end of the month following the start of the lease.
Step 4: Payment of Stamp Duty
When you finish registering the lease agreement on the Finance Portal, you will see the Stamp Duty payment slip. This is the collection document issued by the tax authorities, which the landlord must pay by the end of the month following the start of the lease. The stamp duty rate charged is 10% of the rent or rent increase (if you only register a change in the rent payable by the tenant).
Stamp duty can be paid at a tax office, through an ATM, or even through your bank's online page.
Step 5: Issuing Electronic Rent Receipts on the Finance Portal
Every month when the rent is paid by the tenant, the landlord must issue an electronic rent receipt.
If you receive monthly rent payments from your tenants, even if they are deposits or advance payments, and you tax your property income in category F of the IRS, you are subject to IRS (and have not opted to tax them in category B (business activity)), then you are required to issue a monthly electronic rent receipt on the Finance Portal.
To issue electronic rent receipts, you need to go to the Finance Portal website, log in with your tax identification number and password, go to Tax Services > Submit > Rental > Issue Rent Receipt. The final page shows all the rental agreements (if you have more than one) for which you are the landlord. You must select the rental agreement for which you want to issue the electronic rent receipt. To find out how to fill out an electronic receipt, see this page.
Step 6: Completing IRS Annex F
If you own real estate, you must declare any profits from it, such as rent, in IRS Annex F, which is the document relating to property income.