Buying a property in Madeira is one of the biggest investments you can make. Before continuing with the process, make sure that you have done all the required research.
Make sure you use the assistance of a qualified real estate agent. Once you choose the property you want to buy, compare prices and your offer is accepted verbally, insisting on updating the documents to ensure that the seller is the registered owner and He has all the licenses, make sure your lawyer checks all relevant documents.
Land registry certificate
This certificate contains complete details of the registered legal history of the property and reflects any burden or fee, such as a mortgage.
Document recognizes if you planning about Buying a property in Madeira
This document not only identifies the unique tax number, but also identifies the tax status of the property by property description (size, area, number of rooms, floor, and history). In addition, it classifies the owner and his tax amount.
Usage license
This license is proof that the property has been approved to be used by the respective city council, for example, residential or commercial use.
Energy certificate
Documents mandated for the sale of all properties, except under certain special conditions provided by law.
Housing Technical Sheet
A document containing all the information related to the construction of the property. It is mandatory for all assets licensed after 2004 use.
Infrastructure certificate
A certificate issued by the concerned city council confirming the completion of sanitation equipment after the subdivision. It is mandatory in the first property transfer after the creation of property in the subdivision.
If the selected property has all the required documents updated, it is possible to proceed immediately with the purchase, setting the task for the earliest available date.
On the other hand, if the selected property does not have all its documents in compliance, then in some cases, it is possible to proceed with the initial contract (promissory purchase and sale agreement) where all the terms of sale are established, the time limit is included on karma.
At this time, 10% of the value of the property is normally paid as a down payment. If you skip the purchase, you lose 10% of the deposit. If the owner agrees, he will have to pay double the amount of the down payment received.
Ensure that any verbal agreement entered into with the seller during negotiations is written into the pledged purchase and sale contract when you sign it.
In Portugal, real estate is usually sold through a public deed of purchase and sale, but it can also be through a certified private document.
In an apartment or development, there are two other aspects to mention, namely the horizontal property and the encircling system. A horizontal property is a means of forming an autonomous fraction within a property that is part of a larger building, with common ownership of land, stairs, gardens, etc.
Portuguese law relevant in these areas is quite complete.
Why to consider Buying a property in Madeira?
There is a lot of demand to invest in the island as the island of Madeira offers a warm climate throughout the year and is considered one of the safest islands in the world where corruption is very low. Economically, Madeira has been a favorite of investors especially for English, German, French, Russian, and Northern European countries. Every year, more visitors are slowly but becoming familiar with the attractions offered by this Atlantic Ocean paradise.
In Portugal, a non-habitual resident (NHR) tax system is called. It is a program that gives qualified individuals the opportunity to become tax residents of “white-listed” jurisdictions and still legally abolish their taxes on most foreign-source income.
The tax residency is good for 10 years and does not come with the specific obligation that you transfer to Portugal during the year or to maintain your resident status.
The greatest draw of the program is the chance to reduce your income tax.
This is probable, in part, due to Portugal’s 71 double taxation treaties. According to the rule, as long as your source of income has the power to tax your income, Portugal will not tax your income from abroad.
Income sources that will not be taxed under this set-up include foreign sources of self-employment, royalties, qualified occupations, occupational pensions, capital gains, and investment or rental income.
It is important to note that capital gains from the sale of securities will be taxed, as will income from blacklisted tax havens that do not have a double tax treaty with Portugal.
Finally, if you have income from Portugal, it will be taxed at the same rate of 20%.
Tax payable for acquisition
I – TRANSFER TAX (IMT)
Since January 2004, the transfer tax is known as IMT (“Municipal Tax on Transferable Payments”) and is calculated as two taxable values (the equity value of the property – taxation, or acquisition value, whichever is higher):
- Residential (houses and apartments) 0% – 7.5%;
- Rustic wealth (agricultural land) 5%;
- Land for urban, construction, or trade 6.5%.
When an urban property is purchased for its own and permanent housing, the IMT is less than the secondary housing, and if the occupancy or VPT is less than € 115,508.75, it is a tax exemption.
II – Stamp Tax: 0.8% on the acquisition price.
- These taxes are paid before signing the deed.
- Other expenses
- Tax representation
Companies typically charge an initial fee of around € 250, and an annual fee of around € 250 for the services described above.
Property registration fee
You have to register the purchase at the Land Registry Office of the area and the tax office where the property is located. The main costs are as follows:
- Acquisition record € 250;
- Mortgage registration € 250;
- Additional +/- € 100.
Notary fees
When the notary profession was privatized, there was a considerable change in the notary fee and now it depends on the office where the deed is signed. A public deed of purchase and sale, signed by both parties, must be prepared before a public notary, and submitted to the Land Registry, with copies for the parties involved.
IMI – Annual Property Fee
IMI is an annual tax on a property that is set by each municipality, but within the range defined by law, which this year ranges from 0.3% to 0.45% for urban buildings and 0.8% for rustic buildings. In respect of urban buildings, the tax is determined annually by the city council of the area where the property is located.
The IMI is calculated based on the tax equity value of the property at the end of December 31 of each year and at the end of April of the following year. If the amount exceeds € 250.00, it can be paid in two installments, the first in late April, and the second in late November, the year in which the tax is applied.
When an urban property is purchased for permanent housing, its owner may be exempted from payment of IMI for a period of 3 years if the tax equity value of the property acquired does not exceed the value of € 125,000.00 and the owner, Previous. In the year, there was no taxable income over € 153,300.00 for IRS purposes.
Know the other facts and information about Buying a property in Madeira at https://www.madeira-web.com/en/madeira/facts/government.html
