Methodology, sources and model limitations

Gross yield = scheduled annual rent / purchase price. Operating yield = income after running costs (NOI) / price. Yield on cost uses total property cost. Return on cash invested (cash-on-cash) uses income after financing and modelled tax, without the sale. Internal rate of return (IRR) considers when you invest and receive money, including the sale or net value of a retained property; it may not exist for some cash-flow patterns. Net present value (NPV) brings those cash flows to today using your required return and subtracts the initial investment.

We use the official government property-purchase-tax tables for 2026 and the residency, date and relief choices shown in the form. The taxable property value (VPT) is a value used for tax, not a market valuation; when missing, the model uses purchase price as a proxy where indicated. Rental and capital-gains tax rates simplify personal circumstances. The calculation neither confirms relief entitlement nor replaces a tax return. Check residency, exceptions, reinvestment, business activity and household circumstances with Portugal’s tax authority (AT).

Article 45-C of the Tax Benefits Statute (EBF) provides a 10% rate for qualifying income received from 1 January 2026 to 31 December 2029, unless a more favourable rate applies. The model uses the lower of 10% and your entered rate. It tests the whole property’s amount against the documented national €2,300/month limit. If its checks fail, or from 2030 onwards, it uses your entered rate. Its calendar starts with the whole 2026 purchase month, without day-level proration; that is a simulation limit, not a legal requirement to buy in 2026. Future ceiling updates and regional uplifts are not forecast: confirm the treatment for the islands. Your entered rate is an assumption, not verification of the conditions for another reduction.

Months before letting starts do not dilute the average. Extra payments entered only to test the limit add no income or taxable base to the calculation; do not repeat amounts already included in rent. This is a forward-looking assumption, not a complete annual tax return: confirm actual averages and early lease endings. Manual mode keeps the rate constant, including older scenarios. Exemption under the separate affordable-rental scheme (RSAA) is not applied automatically; its official limits and conditions need verification. Small rounding differences can occur between the tax reduction and the change in profit.