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Rental income, tax

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Posts: 247
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(@aspidistra)
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Hi all

I understand repairs on a property can be offset against rental income that you might get from the property.

My question is, if you do a lot of repairs/renovation before you start renting out, but in the same tax year, can you claim that back against your taxable income?

I know in the UK you can only claim repairs from the time you are renting the property out.

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(@thomasribatejo)
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Joined: 5 years ago

I think your best option would be to speak to an accountant.  In order to rent, you'd need to be appropriately set up in any event, and an accountant would be part of this process.  Depending on the type of setup (Alojamento Local vs longer term; unipessoal vs empresa; etc), different strategies may exist for offsetting the works you undertake.  You may need to have initial chats with 2 or 3 accountants to get the best picture of options, and to filter out any upselling of support that some accountants can tend to do.  Please bear in mind that everyone's tax situation is likely to differ, so what works or is possible for one person may not apply to you.

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Posts: 146
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(@tygger)
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Aspidistra

As Thomas says you really need to speak with an accountant, you're going to need on to provide your tax return on your rental property.

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Posts: 247
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Topic starter
(@aspidistra)
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Joined: 4 months ago

Thanks both. I am probably going to use Sovereign as a fiscal rep, it seems I then have to pay for accountancy as a separate thing? Feels like the fiscal rep gets money doing nothing but checking that a tax return is sent in?

If anyone can recommend a good accountant in the central Algarve…I know this is something all the big companies offer but ideally I would like someone you can occasionally ask a question to without them charging you massive additional fees. Not asking for anything for free but it does seem anything to do with money costs, well, a lot of money.

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(@sonia)
Joined: 6 months ago

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Posts: 94

@aspidistra Verónica an American expat that has an youtube channel (American In Portugal) recently did an interview with an accountant from faro, he talked about the fiscal representative and some other things.

 

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(@jeanne)
Joined: 1 year ago

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Posts: 276

@sonia   I also saw veronicas YouTube with her accountant. It surprised me to hear him say that US social security is definitely NOT taxed as  pension income under the NHR.  I think all the other interviews I've seen with Portuguese financial folk have said that SS definitely IS taxed.  Or did I hear him incorrectly?

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(@chabu)
Joined: 8 months ago

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Posts: 1

@jeanne Social Security is not taxed in Portugal because of the tax treaty with US (source of income is in US so it is taxed in US).

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(@jeanne)
Joined: 1 year ago

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Posts: 276

@chabu   thank you.  Do you know if / how ROTH withdrawals would be handled?  The tax has been paid on the 'front end', but only in the initial investment.  How does PT taxation view that at the time of withdrawal? 

401k withdrawals will be taxed by the US, so those will clearly not be taxed by PT.

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Admin
(@thomasribatejo)
Joined: 5 years ago

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Posts: 474

@aspidistra If it were me, I'd do it the other way around, and have the accountant be the fiscal rep.

Initially, I used JS Advisers who are in Albufeira - they completed my financial setup (I already had NIF and bank account), so NHR, a few bits of paperwork, and first two years' income tax for my partner and me... and were very helpful (mostly email, one video call).  All for one annual fee.  So, additional questions unlikely to be chargeable, but detailed/lengthy specialist advice might be, I suppose.

Clearly, if you have a business, they'd need/want more money - but they are familiar with clients whose business is rental.

I moved because, with a new Portuguese business, we needed someone closer to us (Ribatejo) - and with some local knowledge in our area.  Otherwise, I couldn't fault JS.

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Posts: 61
 QBV
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(@bon-ventos)
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Joined: 13 years ago

You do not specify what regime you will be renting under. If you are going the AL route, no deductions are allowed. That is taken into account as you are taxed on only 35% on the turnover. Regardless, as everyone else advises, talking to an accountant (or 3) is the way forward.

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