Gross yield in Portugal is about 4-5% in the big cities and 5-8% inland, but after tax, costs and vacancy a Lisbon flat nets nearer 2-3%. Here is the arithmetic.
Portugal is a market where the headline yield and the yield you keep are far apart. As of October 2026, gross rental yield is roughly 4-5% in Lisbon, Porto and Faro and 5-8% in smaller inland cities. After the 25% flat tax for non-resident landlords, property tax, condominium costs and empty months, a Lisbon apartment bought at today's prices typically nets about 2-3% of the price paid. This guide shows where the numbers come from and how to read them.
Gross yield by city, 2026
Two sources give different levels because they measure differently. Idealista works from asking prices and asking rents and puts Portugal at 6.2% gross in Q2 2026, down from 6.9% a year earlier and 7.2% two years earlier. Global Property Guide uses a more conservative method and gives a national average of about 4.3%.
- Lisbon: about 3.8% (Global Property Guide) to 4.3% (idealista), the lowest of any district capital.
- Porto: about 4.0% to 4.8%.
- Faro and the Algarve: about 4.5% to 4.8%; small studios can show higher figures.
- Funchal (Madeira): 5.2% (idealista); local press describes buy-to-let in Funchal as low-yielding.
- Ponta Delgada (Azores): 5.6%.
- Inland and secondary cities: Castelo Branco and Vila Real 8.1%, Bragança 7.6%, Santarém 6.6%, Coimbra 6.4%, Leiria 6.0%, Évora 5.7%, Setúbal 5.4%, Braga 5.3%.
The pattern is simple: the more expensive the city, the lower the yield. Prices rose 16.5% year on year in Q2 2026 (INE index) while rents have been flat to falling in recent months, so yields are drifting down, not up. See Portugal property prices and buying costs for the price side.
What takes yield away
Gross yield ignores everything that happens between the rent and your account.
- Tax. Non-resident landlords are generally taxed at a flat 25% on net rental income. Residents can choose progressive rates. A reduced 10% autonomous rate exists for qualifying moderate-rent leases (residential, up to 2,300 euro a month, at least three years); whether a non-resident can use it should be confirmed with an accountant.
- IMI, the annual municipal property tax: roughly 0.3-0.45% of the tax value, set by the municipality. Very expensive property may also attract the AIMI surcharge.
- Condominium fees and insurance, which you pay whether or not the flat is let.
- Vacancy between tenants and any management fee if you do not manage it yourself.
- Purchase costs of roughly 8-10% for a non-resident, which raise your real cash outlay. See the costs article linked above.
A worked example (an illustration, not market data)
Assume a Lisbon apartment at 400,000 euro with gross yield of 4.3%, which is 17,200 euro of rent a year. Assume one empty month (about 1,430 euro), 800 euro IMI, 900 euro condominium fees and 1,000 euro maintenance and insurance. Taxable income is about 13,070 euro; at 25% the tax is about 3,270 euro. What remains is about 9,800 euro, or 2.45% of the price, and about 2.2% of the 440,000 euro actually spent once purchase costs are included. Change the assumptions and the answer changes; the point is the gap between 4.3% and 2.2%.
Long-term rent or short-let?
Short-term rental (Alojamento Local) can lift gross income, but it is the most regulated part of the market. Licensing follows Decree-Law 76/2024, Lisbon introduced containment rules in December 2025, municipalities have cancelled more than 10,000 inactive or uninsured licences in 2026, and the Algarve and outer areas remain more open than the big cities. Always check whether a specific unit can obtain or keep a licence before you count on holiday income. Details are in Portugal short-term rental rules; the trade-off is explained in short-term vs long-term rental.
Where the better yields are, and the catch
Inland cities such as Castelo Branco, Vila Real or Bragança show 6-8% gross, but they are thin markets: fewer tenants, slower resale and lower price growth. Lisbon and the Algarve yield less but are easier to let and to sell. Yield is only one part of the return; price growth, liquidity and exit costs matter just as much. See capital gains tax on sale, best areas to buy and investment risks.
FAQ
What is a realistic net yield in Portugal? For a non-resident buying in Lisbon or Porto, roughly 2-3% of the price paid after tax and costs; inland, possibly 4-5%. These are indicative, not a forecast.
Is rental yield in Portugal falling? Yes. Idealista's national gross yield fell from 7.2% in Q2 2024 to 6.2% in Q2 2026 because prices rose faster than rents.
Does buying property give residency? No. The real-estate route of the golden visa closed in 2023; see Portugal golden visa.
Can I finance it with a mortgage? Non-residents can, usually at lower loan-to-value; see mortgages for foreigners in Portugal.
How we help
We shortlist Portuguese properties against your goal (income, growth or use), model net yield after tax and costs for each, and coordinate local lawyers and tax advisers. You can browse the market on the Portugal page.
Informational only, not legal, tax or investment advice. Yields and rules are indicative, as of October 2026, and change; confirm with a Portuguese lawyer and accountant before you buy.