Portugal joined the European Union in 1986 and is now one of the countries with the highest human development indexes. As a result the island is flooded with investors from across Europe, the USA, Brazil, Scandinavia snapping up properties. Never has there been a better time to buy or sell property on Madeira Island.
Madeira
The island of Madeira is approximately 900 kilometres south-west of Portugal and 600 kilometres off the coast of North Africa. It is just 50 kilometres long.
The archipelago of Madeira has been attracting the wealthy of Europe for over 200 years due to its consistently pleasant climate and breathtaking scenery. The warm seas that surround the island are perfect for swimming, and the island’s rocky shoreline offers plenty of places to splash around. Smart investors know that Madeira, with its year-round rental possibility and outstanding second home location, is an ideal alternative to long-haul locations for sun lovers, and that it can be accessed in roughly three hours through direct flights from the UK, Ireland, and mainland Europe.
Think about these benefits if you’re thinking about buying a house on the island:
- Subtropical climate, which is warm and pleasant nearly all year round and makes outdoor activities possible
- Stunning landscapes—the “Garden of the Atlantic,” with its rich vegetation and vivid colours.
- Convenience: direct flights from more than 40 European locations take less than 3 hours.
70% of the island is designated as parkland or forest preserves, and Madeira’s position in the middle of the Atlantic Ocean helps to keep the air clean.
- Recreational and competitive sports galore
Modern investments in the road infrastructures have opened up the north and south-west beaches and enabled for the growth of the most diversified leisure activities, cementing the region’s reputation as a top-tier tourist destination.
- High standards of living, with the city being welcoming, secure, quiet, and spotless
- Warm welcomes from genuinely kind and helpful locals. The Portuguese are a warm and welcoming people. In the travel industry, not only is English widely spoken but also German and French.
Purchasing
People “fall in love” with Madeira and keep coming back because it serves as their refuge from the stresses of daily life at home or their winter home to avoid the cold in northern Europe.
We at esalesinternational carefully select properties that we believe will appeal to and meet the needs of non-residents who decide to make Madeira their permanent home or at least a more permanent part of their lives, regardless of their budget.
Prerequisites
Any citizen in the world can purchase real estate on Madeira.
European citizens who plan to spend fewer than 183 days a year on the island can buy property without a resident permit.
To get further specifics, you could get in touch with the Portuguese consulate nearest to where you now live.
Procedure
We can assist you in finding the ideal home, and then strongly suggest that you make a formal offer in writing to the seller. In order to get you ready for the second phase of the Promissory Contract of Purchase and Sale, we will help with advice on the terms and conditions on your behalf, and if an agreement is achieved, we will advise you on legal and financial representation (Contrato Promessa de Compra e venda). The contract is binding and is generally accompanied by a down payment of between 10 and 25 percent of the purchase price.
Depending on the current condition of the property and the demands of both parties, the final document of sale or completion (Escruitura) may be issued within 30 to 90 days.
The “Casa Pronta,” a lawyer’s office, or a public notary are all acceptable locations for this ceremony. At this time, you will also pay the IMT tax, stamp duty tax, and notary and land registration fees.
A Budgetary Estimate
A Portuguese fiscal number (Nmero de contribuente) is required by the local tax office when purchasing real estate in Portugal. Acquiring this is simple, and your lawyer will likely handle it for you.
Immigration to Portugal for Permanent Residency
If you plan to stay in Madeira for an extended period of time (more than 183 days) or permanently, you must apply for residency. You now have the same legal protections as a native-born Portuguese citizen, thanks to this document.
Taxation on the Transfer of Real Property
As an incentive for tax residents, Madeira has eliminated this tax for a spouse, children, or parents inheriting property, while all other parties will only be liable for 10%. If you are not a tax resident of Madeira, any inheritance you receive from a Madeira property may be subject to inheritance tax in your country of tax domicile.
A Portuguese will
It is recommended that anyone who owns property in Madeira also have a Portuguese Will drawn up on the island.
SALE OR PURCHASE TAXES
Stamp Duty on Real Estate Transactions (IMT)
Payable just before the closing deed is executed, this is a one-time payment to the Portuguese government for the property transfer tax. The maximum amount that may be earned tax-free is €115 000. (one hundred and fifteen thousand Euros). For purchases over €688 544, there is a sliding scale up to 6% of the purchase price (six hundred and eighty- eight thousand and five hundred and forty-four Euros). Purchasing a plot of property, whether in an urban
land-based (i.e., agricultural) only is subject to a fixed rate of 6.5% tax – regardless of sales value.
Tax on Stamps
(Silver tax)
As with the completion fee, this one is 0.8% of the final tally.
Costs of Notarization and Filing
A little charge is due the Land Registry to have the property transferred into your name, and a similar sum is due the Notary Public for preparing the Final Deed. These quantities differ but often don’t go over €1,000, unless you’re getting a mortgage from one of the local Portuguese banks.
VARIOUS OTHER TAXES
Institutionalized Non-Majority Incidentality Tax
Your yearly municipal tax payment for things like trash pickup, street maintenance, and education is based on two things: I the ratable worth of your property according to the local municipality, and (ii) the percentage tax rate established by the municipal government. Depending on the location or region, these levies might be as low as 0.4% of the rateable value and as high as 0.8%. These ratable values are subject to regular reviews.
Taxes on Capital Gains
In other words, the difference between the selling price and the buying price is subject to taxation.
Residents of Madeira who make a profit from the sale of an asset used as their primary residence for at least six months prior to the sale are subject to a 20% tax on 50% of that profit, or none at all if the “gain” (profit) is invested in another primary residence in Madeira. The time period for making such a reinvestment is limited, and any remaining gain will be subject to capital gains tax.
Gains made by non-residents are subject to a 25% tax, less certain exemptions.
The capital gains tax does not apply to anything that was owned before January 1, 1989, as long as the title is still in the owner’s name as of that date. Contact us today to buy or sell property in Madeira fast online.
