Cost of Living in Lisbon

Lisbon Portugal - A brief look at the city of Lisbon shows that it has been on the rise in prices since 2014, the economic data is improving, there is a market of short-term rental apartments that needs to be understood in depth. Outside the city center in the small apartments. Seemingly the market is interesting, but from a first inspection I found that there are not many management companies, and most of the existing management companies focus on short-term apartments for tourism. When I examine a particular market, before I delve into it, I examine the subject of taxation, the capital gains tax in Portugal is 7% and also the rent tax is also 28% after deducting expenses.

I want to calculate, using an example (average return over time), what is the expected rental income for a property purchased in the amount of 100,000 Euros, since there are acquisition costs, I will calculate the rental return by 6.5% gross.

Gross annual income 6,500 EUR

Annual expenses of a management company, property insurance, vacant property until finding a tenant and repairs, a total of 20% of the annual rent 1,300 euros.

Pre-tax income of 5,200 Euro, this must be deducted 28% tax in Portugal 1,456 Euro, meaning we stayed with 3,744 Euro before the tax deduction in Israel.

In Israel there are two tax calculation options, if no buyers with financing and no major repairs were made, the option of 15% on gross income with clearing depreciation is preferable, in this case we will pay another tax in Israel at the height of 575 euros.

How much do we have left? 6,500 Annual rental, less tax in Portugal 1,456, less tax in Israel 575 less 1,300 Euro expenses We have 3,169 euros left.

Since the acquisition costs in Portugal are at least 10%, the total asset price is 110,000 Euro, net annual income 3,169 reflects net investment return after tax on investment approximately 2.88%. This is an initial return.

The market is likely to continue the rise in prices and rents, need to study the market and economy in Portugal in depth.

Unemployment currently stands at 9% (no need to panic, when unemployment drops to 5%, property prices will be significantly higher) In addition to the issue of management companies, check whether it is easy to manage in English, In Lisbon after tax is 892 euros, investors need to take this into account in the type of properties they are looking for and the amount of rent they produce, in order to appeal to a wide target audience….

Rent Per Month [Edit]
Apartment (1 bedroom) in City Center 744.49 € 500.00-1,000.00
Apartment (1 bedroom) Outside of Center 484.63 € 350.00-700.00
Apartment (3 bedrooms) in City Center 1,446.96 € 1,000.00-2,000.00
Apartment (3 bedrooms) Outside of Center 855.97 € 560.00-1,200.00

By the average rent and monthly rent, you can see that it may be a problem to reach a wide audience of renters!

In conclusion, one should try to extend the level of investment risk, return on investment, and compare with other alternatives available to make a decision.