Costs of Buying a Property in Madeira?
As a real estate agency (Exclusive Homes Madeira), we have witnessed the increasing interest in buying properties in Madeira and many clients inquire about the costs that come with it. Madeira island, known for its breathtaking landscapes, mild climate, and tranquil lifestyle, is a destination that has become increasingly popular among those seeking to invest in real estate. However, before jumping into the process of buying a property in Madeira, it is important to understand the costs involved. In this article, we will discuss the different costs associated with buying a property in Madeira, to give you a better understanding of what to expect.
Understanding the Costs of Buying a Property in Madeira
Firstly, it is important to note that property prices in Madeira vary significantly depending on the location, type, and size of the property. The most popular areas for property purchases in Madeira are Funchal, the capital city, and the surrounding coastal areas. Prices in these areas can range from around €150,000 for a small apartment to over €1 million for a luxurious villa.
In addition to the purchase price of the property, there are several other costs that you should be aware of.
Property Transfer Tax (IMT)
IMT is a tax that is charged on the purchase of any property in Portugal, including Madeira. The tax is calculated based on the purchase price of the property, and the rate ranges from 1% to 8%, depending on the value of the property. For properties purchased for €92,407 or less, no IMT is charged.
Stamp Duty (Imposto do Selo)
Stamp duty is a tax that is charged on various legal and financial transactions in Portugal, including the purchase of property. The rate for stamp duty is 0.8% of the purchase price of the property.
Notary and Registration Fees
Notary and registration fees are charged for the legal transfer of ownership of the property. The fees are calculated based on the purchase price of the property and can range from €500 to €1,500.
Legal Fees for Property in Madeira
You can also hire a lawyer to assist you with the legal aspects of purchasing a property in Madeira. Legal fees can vary, but typically range from €1,000 to €3,000, depending on the complexity of the transaction.
Real Estate Agent Fees
In Madeira, real estate agent fees are typically paid by the seller of the property, not the buyer. The fees can vary depending on the agency and the services they provide, but are typically around 5% of the property sale price.
This commission covers the costs of advertising and marketing the property, negotiating with potential buyers, providing guidance and advice throughout the buying process, and handling the paperwork and legal aspects of the sale.
It is important to note that some real estate agents may charge additional fees for services such as property valuation, property inspections, or legal advice. It is important to clarify with the agent beforehand what services are included in their commission and if any additional fees will be charged.
While not mandatory, it is recommended to have a property survey done to identify any potential issues with the property. The cost of a property survey can range from €200 to €1,000.
Maintenance and Renovation Costs for Property in Madeira
Finally, it is important to consider the potential maintenance and renovation costs associated with owning a property in Madeira. Depending on the condition of the property, you may need to invest in repairs and upgrades to ensure it is in good condition.
Property Transfer Tax (IMT): what to expect?
The Property Transfer Tax, also known as IMT (Imposto Municipal sobre as Transmissões Onerosas de Imóveis), is a tax that is levied on the purchase of a property in Portugal. The tax is payable by the buyer and is calculated based on the purchase price of the property, the type of property, and the location of the property.
The IMT rates in Portugal vary depending on the value of the property being purchased, with higher rates being applied to higher value properties. The current rates for residential properties are as follows:
- Up to €92,407: 0%
- €92,407 to €126,403: 2%
- €126,403 to €172,348: 5%
- €172,348 to €287,213: 7%
- €287,213 to €574,323: 8%
- €574,323 to €1,000,000: 6%
- Over €1,000,000: 7%
For commercial properties, the rates range from 1% to 8%, depending on the value of the property.
It is important to note that there are some exemptions to the IMT tax in Portugal, such as for properties purchased as a primary residence or for properties located in certain areas designated for urban regeneration.
It is advisable to consult with a tax professional or a real estate agency to fully understand the IMT tax and other taxes and fees that may be associated with purchasing a property in Portugal.
Our Support and Service for Property in Madeira
As a professional real estate agency, we work with serious partners and specialists in the field of real estate acquisition in Madeira. We support you in finding the right service provider for your requirements at any time. Together we find the right partner for your needs and individual situation, whether lawyer, notary, engineer, architect, typographer, handyman, construction company or any other service provider you need. For all our recommendations, we can provide you with corresponding references that strengthen your security and trust in our partners. We work exclusively with professionals in the area of real estate purchase and sale.
Buying a property in Madeira can be a complex process with various costs associated with it. However, with the help of an experienced real estate agent and a good understanding of the costs involved, you can make an informed decision and find your dream home on this beautiful island.
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