A worked model for an Algarve flat at €300,000: monthly rates and occupancy, what each owner month costs (from €382 to €3,683 of net income), the registration and containment-zone rules, and the two tax routes for non-residents.
In brief (31 October 2026): buying in a Portuguese resort where you already holiday, letting it for about 11 months and keeping one month can work, but in Portugal the tax and licence rules matter as much as the month you choose. In our illustrative model, a two-bedroom, 70 m² Algarve flat bought at €300,000 and occupied about 55% of nights earns roughly €21,100 gross and about €11,500 before income tax after a 20% manager fee and €5,400 of fixed costs, about 3.8% of the price. Keeping November costs about €460 of net income plus two changeover cleanings; keeping August costs about €3,700. A long-term tenant at the Algarve's median rent would bring in less gross, about €9,700 a year, so tourist letting is the point of this model, and it is the most regulated part of the market.
Who this model suits
You already holiday in the same part of Portugal, you want a base that pays part of its own way, and you accept that you will not use it from July to September. It suits people who can travel in spring or autumn, who will let a local manager run the lettings, and who are comfortable with a licence regime that has changed twice in three years. It does not suit buyers who need the income to cover a mortgage, who want to use the flat in August, or who plan to rely on a licence they have not seen: you should check that the flat already holds an active registration, because a new one may not be obtainable in a containment zone.
For the general framework see the hub guide and how to choose your owner month and calculate break-even.
When Portugal's resorts are busy
We did not find a month-by-month occupancy and rate table for Algarve flats in 2026 in public sources. What exists is partial and inconsistent: the AirDNA pages we saw show annual figures for Albufeira that conflict with each other (about 62% occupancy on one page, 86% on another), the Algarve hotel association (AHETA) reports hotel figures for 2025 of an average daily rate of €134.4 and revenue per available room of €78.5, and a 2026 market guide warns that July and August should not be used as the annual average. So the monthly numbers in the example are our assumptions, shaped like a typical southern European resort curve:
- High season: July to September.
- Shoulder season: April to June and October.
- Low season: November to March, with some golf and winter-sun demand in the Algarve (a general observation, not a measured figure).
Three areas and what a budget buys
For the Algarve (Faro district) our price page gives an INE median of about €3,139 per m², listing averages of about €4,874 per m² and a long-term rent of about €11.56 per m² per month; see what can you buy in Portugal for €150,000–600,000. We did not verify prices for individual Algarve towns, so the budgets below use the district figures.
- Algarve, Faro district (Albufeira, Lagos, Tavira and others): a 60–80 m² flat costs about €188,000–251,000 at the INE median and about €292,000–390,000 at listing-level prices. Gross yield is reported at roughly 4.5–4.8% for long-term letting. This is the largest and most developed holiday market in Portugal. The trap: the median reflects older and less central stock, while the flats guests want cost closer to the listing average.
- Madeira (Funchal): INE median about €2,500 per m² and listing about €4,506. Idealista puts gross yield in Funchal at 5.2%, though local press calls buy-to-let there low-yielding. The climate is mild year-round, which flattens the seasonal curve, and the island has its own licensing context.
- Cascais and the Lisbon coast: about €4,550 per m² in Cascais and €4,187 in Oeiras. Year-round demand and a city nearby, but higher prices and, around Lisbon, municipal containment rules.
See also rental yield in Portugal and best areas to buy in Portugal.
A worked example (illustrative arithmetic, not market data)
Assumptions: a two-bedroom, 70 m² Algarve flat bought at €300,000 (about €4,290 per m²), let through a manager and booking platforms. Our assumed nightly rate, occupancy and resulting monthly revenue:
- January: €55 a night, 28% occupancy, revenue €477
- February: €55, 32%, €493
- March: €65, 42%, €846
- April: €80, 52%, €1,248
- May: €95, 58%, €1,708
- June: €115, 70%, €2,415
- July: €150, 85%, €3,953
- August: €165, 90%, €4,604
- September: €120, 75%, €2,700
- October: €85, 52%, €1,370
- November: €60, 32%, €576
- December: €65, 36%, €725
That is about €21,115 of revenue a year, an average of about 55% of nights occupied at an implied €106 per occupied night. Costs: a manager at 20% of revenue (€4,223) and fixed costs of €5,400: condominium fees €1,200, IMI property tax €800, insurance including the compulsory tourist-letting liability cover €500, utilities and internet €1,700, and a reserve for maintenance and linen €1,200. Net before income tax and before any mortgage: €21,115 − €4,223 − €5,400 = €11,492, or 3.8% of the price.
For comparison, the same 70 m² let long-term at the Algarve's average rent of €11.56 per m² would bring in about €9,700 a year gross, before the same fixed costs and tax. Tourist letting earns more on paper, which is the reason for the model, but it carries the licence, vacancy and wear risk described in short-term vs long-term rental.
Which month to keep for yourself
The lost net income is the month's revenue less the manager's 20% share. In the model:
- January €382, February €394, November €461, December €580
- October €1,096, May €1,366, September €2,160
- August €3,683
Add two changeover cleanings of about €120 each (before and after your stay). All in, November costs about €700, October about €1,340, May about €1,610 and August about €3,920. Choose by weather and flights first: October and May are warm enough for the beach and cost roughly €1,340–1,610 all in, and September is a good month for the sea but already costs about €2,400.
11 months or 12, and what if the plan underperforms
- 12 months of letting, no owner stay: net €11,492 (3.8%).
- 11 months, November kept, with the two cleanings: €10,791 (3.6%).
- 11 months, August kept, with the cleanings: €7,569 (2.5%).
Stress tests on the 12-month case: occupancy 10 points lower in every month lowers revenue to €17,728 and net to €8,782 (2.9%); nightly rates 10% lower give revenue €19,004 and net €9,803 (3.3%). Net before tax reaches zero when revenue falls to about €6,750, around 32% of the modelled figure. These figures are before income tax, mortgage interest and refurbishment, and they assume an active registration.
Licence, insurance and condominium rules when you also use the flat
Every tourist let in Portugal needs a registration number (RNAL) and a civil-liability policy, commonly cited at a minimum of €75,000 per claim, as part of registration. Decree-Law 76/2024 made existing licences permanent and transferable again and ended the national freeze, but municipalities such as Lisbon and Porto and parts of the Algarve can still declare containment zones where new registrations are suspended or capped; Lisbon introduced containment rules in December 2025, and municipalities cancelled more than 10,000 inactive or uninsured licences in 2026. Before you buy, check that the flat holds an active, transferable registration. The details are in short-term rental rules in Portugal.
We found no rule that bars an owner from staying in a registered unit, but ask the municipality and your manager. In apartment buildings the condominium has a say in tourist letting; the 2024 rules reportedly let owners object by a qualified majority, which you should confirm for the specific building. Read the condominium minutes and statutes before buying. For insurance, see home insurance for non-resident owners and licences, condo rules and insurance.
Taxes in short
This is not tax advice. Non-resident individuals are generally taxed at a flat 25% on rental income in Portugal. Tourist letting is, as a rule, taxed as business income (Category B), with a simplified regime reported to apply a 0.35 coefficient to gross income before the rate; there is also an option to be taxed as property income (Category F) on net income, and a different coefficient of 0.5 is listed for flats in containment zones. These sources are of mixed dates, so confirm them with an accountant. On our example the two routes give different tax: 25% × 35% × €21,115 is about €1,850 under the simplified regime, against 25% of the €11,492 net, about €2,870, on a net-income basis. We found no rule on how days of your own use are treated. For the cross-country picture see personal-use days and rental income taxes and for the sale side capital gains tax on sale in Portugal.
Buying costs
A non-resident should budget roughly 8–10% on top of the price, including IMT transfer tax, 0.8% stamp duty, notary and registry fees and a lawyer; see Portugal property prices and buying costs. Annual IMI is roughly 0.3–0.45% of the tax value, set by the municipality. Compare manager contracts using management companies abroad: fees, contracts and choosing and managing a holiday home abroad.
Common mistakes
- Buying a flat in a containment zone on the assumption that a new registration will be granted.
- Using July to September figures as the annual average.
- Keeping August without pricing it.
- Counting income before tax and the compulsory insurance.
- Leaving the blocking of your dates to a verbal promise.
- Taking a headline gross yield without checking whether it describes long-term or tourist lets.
Checklist before you offer
- The flat holds an active, transferable registration, or you have written proof that it can be obtained.
- The condominium statutes and minutes allow tourist lets.
- Liability insurance meeting the registration requirement is in place.
- You have a written manager contract with owner dates, fees and cancellation rules.
- You have run the model with 10 points less occupancy and 10% lower rates.
- You have picked your month and priced it.
FAQ
Can I stay in my own flat if I rent it to tourists in Portugal? We found no rule against it, but confirm with the municipality and your manager, and block your dates in the contract.
How much does it cost to keep one month for myself? In our illustrative model about €700 all in for November, about €1,340 for October and about €3,920 for August.
Is the registration transferable when I buy? Since Decree-Law 76/2024 existing registrations are permanent and transferable again, but check the specific number and any containment zone.
How is tourist letting taxed for a non-resident? Generally at a flat 25%, on a base that depends on the regime; we show the simplified and the net-income routes above and recommend an accountant.
Is the Algarve better than Madeira for this model? The Algarve has the larger holiday market and a stronger summer; Madeira's mild climate flattens the seasons but its market is smaller and has its own context.
Informational only, not legal, tax or investment advice. Figures are illustrative and as of October 2026.