Best Places to Buy Rental Property in Portugal and Italy If You Have (or Want) Residency

Where you should buy rental property in Portugal and Italy in 2026 depends on what you need from it. Some markets pay you in yield, some in liquidity, and some give you a home base you'll actually use.

Prices aren't waiting. Portuguese house prices rose 16.5% year on year in Q2 2026, while buyers with a tax residence outside Portugal bought just 1,890 homes, 4.7% of all sales and 10.3% fewer than a year earlier (Source: Statistics Portugal, INE).

That gap is worth reading closely. At Bitizenship, the team works with Bitcoin-aligned investors in a specific order: secure residency through a qualifying investment first, then judge any property on its own numbers.

This guide ranks nine rental markets across both countries using current yield data. It also covers the 2026 rule changes landlords can't ignore and explains where residency fits.

Key Takeaways

• Italy's large cities yield 5.4% to 8.4% gross; Lisbon sits at 4.3%.
• Rental property doesn't qualify for Portugal's Golden Visa or Italy's Investor Visa.
• Bitizenship helps you secure residency before choosing the best places to buy rental property.
• Both countries now reward long-term leases and add paperwork to short-term rentals.

Why Rental Property and Residency Are Two Separate Decisions

Let's start with the point most buyers get wrong. A rental apartment in Porto or Rome won't, on its own, give you the right to live in either country.

• Portugal: Real estate was removed from the Golden Visa in October 2023. The qualifying routes now include regulated funds, such as Bitizenship's Portugal Fund, a Golden Visa-eligible private equity fund with a €500,000 qualifying investment. 

See Portugal's real estate rules for the full picture.

• Italy: The Investor Visa offers four routes: €250,000 in an innovative startup, €500,000 in an Italian company, a €1,000,000 philanthropic donation, or €2,000,000 in government bonds. There's no real estate route, and there never was.
• Ownership isn't status: Owning a home doesn't make you a resident. In Portugal, a property can support other visa applications as proof of accommodation, but it isn't the qualifying investment.
• Tax residency is a third question: Where you're taxed depends on where you live and spend your time, not on where your rental sits.

That's why the smartest sequence treats residency as one investment and the rental property as another, each judged on its own merits.

What Changed for Landlords in Portugal and Italy in 2026

Before you pick a city, know the rulebook. Both countries rewrote it this year.

• Portugal's 10% rental rate: Under the 2026 housing tax package, income from qualifying long-term leases at moderate rents, generally up to €2,300 per month, can be taxed at a 10% autonomous IRS rate instead of 25%, through the end of 2029, subject to conditions (Source: Portugal's 2026 housing tax package).
• Portugal's short-term rentals: Decree-Law 76/2024 handed Alojamento Local (AL) licensing back to municipalities. Lisbon now suspends new licences in parishes where AL reaches a 10% ratio (Source: Lisbon municipal AL regulation).
• EU-wide registration: From May 20, 2026, EU Regulation 2024/1028 requires platforms to verify a registration number before publishing a short-term listing and to report activity to authorities.
• Italy's long-term leases: The cedolare secca flat tax stays at 21% on free-market leases and 10% on canone concordato contracts in high-housing-pressure municipalities (Source: Italian Revenue Agency rules for 2026).
• Italy's short lets: The first short-let unit is taxed at 21% and the second at 26%. From the third unit, the activity is presumed to be a business, requiring a VAT number (Source: Italian Budget Law 2026, Law 199/2025). Every listing needs a national identification code (CIN).
• Italy's flat tax doesn't cover Italian rent: The €300,000 flat tax for new residents covers foreign-sourced income only. Rent from an Italian property is Italian-source income and taxed under standard rules. See Italy's flat tax for details.

The direction is the same in both countries: long-term leases get incentives, short-term rentals get scrutiny. Our team covers the resident-side upside in real estate tax benefits.

The 9 Best Places to Buy Rental Property in Portugal and Italy

The nine markets below are ranked on a mix of gross yield, tenant demand, liquidity, and how the 2026 rules affect landlords. Each one suits a different investor, so read the tradeoffs as closely as the yields.

1. Porto, Portugal: The Balanced Long-Term Rental Pick

Porto is the most balanced market on this list. It has real tenant demand, solid resale liquidity, and prices still well below Lisbon's.

• Gross yield of 4.8% in Q2 2026, ahead of Lisbon's 4.3% (Source: idealista).
• Porto Metropolitan Area median price of €2,305 per m² in Q4 2025, against €3,439 in Greater Lisbon (Source: INE).
• Several central historic parishes are closed to new AL licences, so short-let plans need a parish-level check before you buy.
• Most long-term leases here sit below €2,300 a month, which puts the new 10% IRS rate within reach.

It's also one of the best Portuguese cities to spend time in, which matters if you hold residency and visit regularly.

2. Turin and Genoa, Italy: Northern Yield Without Milan Prices

If you want northern Italian stability without paying Milan prices, Turin and Genoa are the obvious targets.

• Genoa delivered an 8.0% gross yield and Turin 7.6% in Q2 2026, both well above Milan's 5.4% (Source: idealista).
• Genoa posted one of the fastest rent increases in Italy, up 8.2% year on year to an average €643 a month for a 60 m² semi-central flat (Source: Ufficio Studi Locare, June 2026).
• Lower absolute rents mean thinner margins for repairs and vacancies, so net yield can fall faster than in pricier cities.

Both cities rank among the best Italian cities for value-minded residents and investors alike.

3. Braga and Coimbra, Portugal: University and Young-Professional Demand

Portugal's second-tier cities offer something Lisbon can't: yields above 5% with steady local demand.

• Coimbra recorded a 6.4% gross yield in Q2 2026, Leiria 6.0%, Braga 5.3%, and Aveiro 5.0% (Source: idealista).
• Coimbra's university anchors student and academic rental demand year-round.
• Typical rents in these cities fall well under the €2,300 moderate-rent ceiling, so the 10% IRS rate is realistic for most long-term leases.

Here's why that matters: cutting rental tax from 25% to 10% lifts net yield more than most renovations will. Portugal's new tax regime explains how residents can benefit.

4. Rome and Naples, Italy: Deep Tenant Pools

Rome and Naples combine large, diverse tenant bases with yields that still beat Italian government bonds.

• Rome delivered a 6.9% gross yield and Naples 6.6% in Q2 2026, against a 3.9% yield on 10-year Italian BTPs (Source: idealista).
• Rome's average rent reached €1,120 a month in June 2026, up 2.8% year on year (Source: Ufficio Studi Locare).
• Short-let investors face the CIN requirement, the 21%/26% tax split, and business status from the third unit.

For anyone planning to live in Italy while owning in these cities, our guide to residency in Italy answers the most common questions.

5. Palermo and Bari, Italy: Southern Italy's Yield Leaders

Southern Italy is where the yield data gets eye-catching, and where due diligence matters most.

• Palermo posted an 8.4% gross yield and Bari 7.4% in Q2 2026 (Source: idealista).
• Among provincial capitals, Trapani led at 11.2%, followed by Biella at 10.7% and Catanzaro at 10.2% (Source: idealista).
• Messina reached a 9.6% gross yield with rents up 8.8% year on year (Source: Ufficio Studi Locare).
• High yields often reflect low purchase prices, which can also mean slower resale and smaller absolute rents.

If you'll make the south your actual home, the Prima Casa 18-month rule can cut registration tax on your own residence from 9% to 2%.

6. Lisbon, Portugal: Capital Stability, Compressed Yields

Lisbon is the hardest place on this list to make cash flow work. It's also the market many buyers want most.

• Lisbon recorded the lowest gross yield among Portugal's district capitals at 4.3% in Q2 2026 (Source: idealista).
• The Lisbon municipality had a median price of €5,198 per m² in Q4 2025, the highest in the country (Source: INE).
• Parishes that hit the 10% AL ratio are closed to new short-term rental licences.

Lisbon makes sense for capital preservation and personal use, not yield. Factor in the cost of living in Portugal if you plan to split time between your rental and your own home.

7. Milan and Florence, Italy: Liquidity Over Yield

Milan and Florence are Italy's premium rental markets. You pay for depth of demand, not for return.

• Milan's gross yield was 5.4% and Florence's 5.8% in Q2 2026, with Bologna at 5.6% (Source: idealista).
• Milan has Italy's highest average rent at €1,338 a month, though rents slipped 0.9% year on year (Source: Ufficio Studi Locare, June 2026).
• Milan is also home to Bitizenship Italia S.r.l., the Milan-based Innovative Startup behind Bitizenship's Bitcoin Dolce Visa.

Premium markets reward buyers with strong financing terms, and residency can help there. Our team explains the financing benefits of residency.

8. Portugal's Interior District Capitals: The High-Yield Niche

Portugal's interior is where yields top 8%. The tradeoff is liquidity.

• Castelo Branco and Vila Real both posted 8.1% gross yields in Q2 2026, followed by Bragança at 7.6% and Santarém at 6.6% (Source: idealista).
• Portugal's national average was 6.2%, down from 6.9% a year earlier (Source: idealista).
• Smaller tenant pools and thinner resale markets mean longer vacancies and slower exits.

Exit planning matters here more than anywhere. Check how the resident capital gains break could affect your eventual sale.

9. The Algarve, Portugal: Seasonal and Lifestyle Demand

The Algarve is a lifestyle market first and a rental market second. For many buyers, that's exactly the point.

• Faro's long-term gross yield was 4.8% in Q2 2026 (Source: idealista).
• The Algarve had a median price of €3,139 per m² in Q4 2025, second only to Greater Lisbon (Source: INE).
• Short-term income is seasonal, and AL rules are set municipality by municipality, so confirm local zoning before you buy.

Read buying property in Portugal for a full cost breakdown before you commit.

No single market wins on every measure, so match the city to your goal: yield in Italy's north and south, balance in Porto and Coimbra, and stability in Lisbon, Milan, and Florence.

Portugal vs Italy Rental Yields at a Glance

Put side by side, the two countries offer different deals. Italy pays more income; Portugal has delivered faster price growth.

• Yield: Italy's large cities outyield Portugal's major cities at almost every tier.
• Appreciation: Portugal recorded the EU's highest annual house price growth in Q1 2026, at 17.8% (Source: Eurostat).
• Gross isn't net: These figures exclude tax, maintenance, vacancies, and management fees.

Residents often see better net numbers than foreign buyers. Our team breaks this down in the real estate advantage of EU residency.

How Residency Fits Into Your Rental Property Strategy

Here's where Bitizenship's two programs come in. They don't replace a rental purchase, they sit alongside it.

Bitizenship's take: Secure residency through a dedicated qualifying investment, then buy rental property on its own merits, in cities where long-term demand doesn't depend on short-let licences. Mixing the two decisions is how investors end up with a property that's neither a good residency vehicle nor a good rental.

• Bitizenship's Portugal Fund: A €500,000 Golden Visa-eligible private equity fund that invests in a fully owned Portuguese company focused on the Bitcoin ecosystem. The stay requirement is just 14 days every two years. Investors may become eligible for permanent residency after five years of legal residence, counted from issuance of the first residence permit, with a consequential pathway to citizenship. Under Portugal's 2026 Nationality Law, in force since May 19, 2026, citizenship now requires 10 years of legal residence for most non-EU nationals and 7 for EU and CPLP nationals, subject to requirements.
• The Bitcoin Dolce Visa: Italy's Investor Visa pathway through a €250,000 equity investment in Bitizenship Italia S.r.l., a Milan-based Bitcoin-focused Innovative Startup. Visa approval comes before capital is transferred, processing typically takes 3 to 6 months, and there's no minimum stay requirement to maintain the visa. Italy is residency by investment only: citizenship requires 10 years of legal residence with genuine full-time presence (183+ days a year), plus B1 Italian. Learn more about the Bitcoin Dolce Visa.
• Payment rules: Neither investment can be made directly in Bitcoin. Portugal requires a transfer from a foreign bank account, and Italy requires a euro-denominated equity transfer.
• Risk: Both are investments with capital at risk. Returns aren't guaranteed, and residency or citizenship outcomes depend on meeting all legal requirements.

"Most people save for a second home. The smartest ones save for a second passport. One gives you a better view. The other gives you and every generation after you options no amount of money can buy later." — Alessandro Palombo, Co-Founder, Bitizenship

For ongoing thinking on residency, property, and Bitcoin, subscribe to The Ale's Letter. You can also compare both routes on the Portugal program page.

Conclusion

The best places to buy rental property in Portugal and Italy in 2026 split cleanly by goal. Turin, Genoa, Palermo, and Portugal's interior lead on yield. Porto, Rome, and Coimbra balance income with demand. Lisbon, Milan, Florence, and the Algarve reward buyers who value liquidity or lifestyle over cash flow.

Whichever market you choose, the rental property won't deliver residency on its own. That comes from a separate qualifying investment, such as Bitizenship's Portugal Fund or the Bitcoin Dolce Visa, chosen to match whether you want minimal-presence European residency or a fast, flexible Italian base. 

Get the residency decision right first, and the property decision gets much easier. 

Get in touch to map your residency route before you choose your first rental market.

Read Next:

• The Real Estate Tax Break Only Residents Get: How EU Residency Cuts Your Capital Gains When Selling Property
• How EU Residency Protects Your Property for Your Heirs
• Why Getting Residency Pays Off More Than Just Buying a Second Home in Europe

FAQs:

1. What are the best places to buy rental property in Portugal and Italy in 2026?

The best places to buy rental property in Portugal and Italy in 2026 depend on whether you prioritize yield or liquidity. Palermo (8.4%), Genoa (8.0%), and Turin (7.6%) lead Italy's large cities on gross yield, while Coimbra (6.4%) and Porto (4.8%) offer balance in Portugal, according to idealista's Q2 2026 data. Bitizenship recommends choosing the market based on your residency plans and how often you'll actually be there.

2. Does buying rental property in Portugal and Italy give you residency?

No. Buying rental property in Portugal and Italy doesn't qualify you for residency by investment. Portugal removed real estate from its Golden Visa in October 2023, and Italy's Investor Visa has never had a property route. Bitizenship offers qualifying alternatives: the €500,000 Bitizenship Portugal Fund for the Portuguese Golden Visa and the €250,000 Bitcoin Dolce Visa for Italy's Investor Visa.

3. How is rental property in Portugal and Italy taxed in 2026?

Rental property in Portugal and Italy is taxed under different 2026 regimes. In Portugal, qualifying long-term leases at moderate rents up to €2,300 a month can be taxed at a 10% IRS rate instead of 25%, subject to conditions. In Italy, long-term leases are taxed at 21% under the cedolare secca, or 10% on canone concordato contracts in high-pressure municipalities. Bitizenship works with vetted tax partners who can advise on your specific situation.

4. Can you run short-term rentals on rental property in Portugal and Italy?

Yes, but short-term rentals on rental property in Portugal and Italy face tighter rules in 2026. Portugal requires an AL licence, and Lisbon and Porto restrict new licences in several central parishes. Italy requires a CIN on every listing, taxes the first unit at 21% and the second at 26%, and treats a third unit as a business. Bitizenship generally suggests long-term leases for investors who won't be on the ground full-time.

5. Should you get residency before buying rental property in Portugal and Italy?

In most cases, securing residency first makes buying rental property in Portugal and Italy simpler to plan. Residency can affect financing, primary-home tax benefits, and how often you can manage the property in person. Bitizenship helps investors pursue residency through compliant pathways in both countries, so the property purchase can be judged purely on its own numbers.

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Disclaimer:
This article is published by Bitizenship for informational and educational purposes only. It reflects Bitizenship's perspective on the investment migration market and is not intended as legal, tax, immigration, investment, or financial advice, nor as an offer or solicitation to subscribe to any investment product. Comparisons with other firms are based on publicly available information and our own assessment of structural differences in business models. We have aimed for accuracy, but descriptions of programs, regulations, and competitor offerings are necessarily summaries and may not capture every legal nuance. Program terms, eligibility criteria, processing times, tax regimes, and regulatory frameworks change frequently and vary by individual circumstances. The Bitcoin Dolce Visa involves an equity investment in Bitizenship Italia S.r.l., an Italian private company. Any investment decision should be made only after reviewing the official documentation and consulting independent legal, tax, and financial advisors qualified in the relevant jurisdictions. Past performance does not guarantee future results. Capital is at risk. Residency and citizenship outcomes depend on meeting all legal, language, residency, and integration requirements set by the relevant authorities and are never guaranteed. Always refer to official government and regulatory sources, and engage qualified professionals before acting on any information in this article.

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