There are several costs which should be taken into account when considering a purchase in Madeira:

The costs at the time of purchase are as follows:

• IMT – Property Transfer Tax;

• Title Transfer (Escritura) fees and Stamp Duty;

• Property Registration Fee;

• Legal Fees.

The ongoing or future costs involved, aside from maintenance, insurance and utilities, are basically:

• IMI - Municipal Rates on the property – Paid annually;

• Inheritance Tax.

IMT – Property Transfer Tax

The Municipal Tax on transfer of the rights to a property (IMT) is basically a purchase tax, payable by the purchaser when a property changes ownership. The rates applicable are the following:

• 1% to 6% for urban property for residential use (Houses & apartments). The rate is calculated on a sliding scale. The table below gives the current formula for calculating the IMT tax.

• 5% for rural (rustic) property.

• 6.5% for urban properties not destined for residential use such as office spaces and other commercial property.

• 6.5% for urban land plot for construction.

Purchase Price Tax Calculation

Payment of the IMT tax is due prior to the Escritura and the proof of payment must be presented to the Notary before the Escritura can be completed.

Title Transfer (Escritura) fees and Stamp Duty

These are payable at the Public Notary for drawing up and witnessing the signing of the Escritura (Title Transfer), and are due on the date of the signing. The total fee is made up of two parts, namely the actual Notary fee, and Stamp Duty on the transaction.

• Stamp Duty on purchase: 0.8% of purchase price.

• The Notary Fee depends on the property value and it is reasonable to expect a fee of between €300 and €500.

Property Registration Fee

The final step in the procedure is to register the purchase with the Property Registry Office (Conservatória do Registo Predial) of the area in which the property is located, and at the Tax Office (Repartição de Finanças).

The costs are as follows:

• Registration of purchase is a fixed value of €250.

• Registration of mortgage is a fixed value of €250 (only if you are buying with a mortgage).

Lawyer's Fee

These fees vary according to the value and complexity of the transaction. While the actual amount will depend on the lawyer chosen and the buyer's direct negotiation, experience has shown that the figure of 1% of the purchase price is a reasonable figure to expect.

IMI - Municipal Annual Rates on the property

The IMI is an annual tax on a property, and is based on the municipal valuation of the property. This value is almost always less (sometimes significantly so) than the agreed price of the property.

The IMI rates vary between the different municipal areas of Madeira

• 0.8% for rural properties;

• 0.2 to 0.5% for urban properties (Houses, apartments, offices and commercial spaces) when the Taxable Asset Value has been updated according to the new rules;

• 0.4 to 0.8% for urban properties which have not yet been evaluated in accordance with the new rules;

The IMI calculation is based on the property values up to the 31st December of each year, and is due at the end of April of the following year. If the amount exceeds €250 it may be paid in two installments with the second payment at the end of September.

When an urban property is used as a permanent and personal residence it is possible to apply for an exemption from paying IMI for a limited period as follows:

Inheritance Tax

An inheritance between husband and wife, and between parents and children, is exempt of inheritance tax.

While we have made every effort to ensure that the information presented is accurate and complete, we do not guarantee its accuracy, this information has been offered for reference purposes only and you should confirm all this information prior to purchase with your lawyer.