Rental income declared by landlords to the tax authorities in 2014 has exceeded the €3 billion mark for the first time with an increase year on year of over €100 million.
The government’s measures to combat non-declaration of rental income seems slowly to be working with the number of people adding rental receipts to their tax return rising 51% in two years and the total income declared rising by €100 million.
In 2013, only 376,300 people declared rental income on their Portuguese properties compared to nearly 2 million last year.
The declared total has risen as in 2013, €2.88 billion was declared for the year 2012 compared to last year when €3.01 billion was declared for 2013.
For the Secretary of State for Fiscal Affairs, Paulo Núncio "This result means that measures to combat illegal rentals have reached their defined objectives."
Source at the Ministry of Finance say that estimates show that 80% of the increase in the rental income declared in 2015 for 2014 arose from its measures to combat undeclared income.
The non-declaration of rental income was one of the many problems identified by the Troika, leading to the taxman taking measures, claiming that inspectors have been scouring holiday booking websites to catch those who fail to declare their rental income. The reality may be different but the threat has been enough for many now to comply before being caught.
"This summer it has become common for owners of holiday homes to say customers that they have a receipt to give them," said a government source who did not offer a definition of 'common.'
Among the threats has been the sending of warning emails to taxpayers before they submit their income tax statements and cross-checking peaks in the water, electricity and gas useage at properties.
The tax authority now controls rental contracts which have to be registered locally and electronic receipts issued by landlords.
Between May and September 2014, 244,366 contracts had been registered which gave the taxman rental income records to check against tax declarations. Of that total, 88,473 were for 'new' contracts.
According to estimates from the Association of Professionals and Real Estate Companies of Portugal (APEMIP), about 23% of Portuguese currently rent their homes.
The number compares with 19% in 2011 and reveals greater demand for homes to rent as most people now cannot get mortgages. There also are many more properties to let as owners want to derive some income from their asset during the prolonged downturn in the property sale market.
For APEMIP boss Luís Lima, the market growth for rental properties haas been sluggish due to very high taxes that landlords were subject to but this has eased with a tax rate of 28% on rental income applicable since 2013.
