Executive Summary
Beyond the asking price: the taxes, fees, and the new non-resident purchase tax that decide what a Madeira home really costs in 2026.
The Sticker Price Is Not the Real Price
The number on the listing is where the budget starts, not where it ends. Between transfer tax, stamp duty, and professional fees, the cost of acquiring a home in Madeira typically adds several percent on top of the price.
Model the full stack before you offer. Buyers who only budget the headline figure are the ones who get surprised at the deed.
Figures below are current as of mid-2026 and meant as orientation, not personal tax advice. Rates change and your situation is specific — confirm with a Portuguese lawyer and accountant before you commit.
IMT: The Transfer Tax
IMT (Imposto Municipal sobre Transmissões) is the big one. It is charged on the higher of the purchase price or the property's tax value (VPT), and it works differently depending on who is buying:
For Portuguese tax residents buying a home, IMT runs on a progressive scale. Madeira sets its own bands, roughly 25% higher than the mainland — an own-and-permanent home is exempt up to about €132,900, a genuine regional advantage on smaller purchases.
For non-residents, 2026 introduced a flat 7.5% IMT on residential property (Decreto-Lei 97/2026), regardless of value. It can be reversed if you become a Portuguese tax resident within two years, or commit the home to affordable long-term rent. The exact timing was still settling through mid-2026, so verify the current position.
Stamp Duty and the Deed Costs
Stamp duty (Imposto do Selo) on the purchase is a flat 0.8% of the price or VPT, paid at the deed.
If you take a Portuguese mortgage, stamp duty also applies to the loan — around 0.6% for terms of five years or more.
The deed and land registration, handled through the Casa Pronta one-stop service, typically run from about €375 without a mortgage to roughly €700 with one.
For a non-resident paying cash, IMT plus stamp duty alone lands near 8.3% of the price.
The Professional Fees
Legal fees: a conveyancing lawyer is optional but strongly recommended, typically 1%–1.5% of the price, or a fixed fee. They run the due diligence that protects you.
Estate agent commission: in Portugal this is paid by the seller, not the buyer — usually 4%–6% plus VAT. You factor it into your negotiation, not your cash outlay.
A pre-purchase survey: not mandatory, but in Madeira's salt-air, high-humidity climate it is money well spent.
What You Pay Every Year After
IMI (municipal property tax): an annual 0.3%–0.45% of the VPT, set by each municipality. Funchal applies the 0.3% minimum in 2026.
AIMI (additional to IMI): only if your Portuguese residential holdings exceed €600,000 per person (€1.2M for a couple filing jointly), then 0.7% and up on the excess.
Running costs: insurance, condominium fees in apartments, utilities, and a maintenance reserve sized for the climate.
And When You Sell
Capital gains for non-residents are no longer a flat 28%. Since the 2023 reform, non-residents are taxed like residents: 50% of the gain is included and taxed at progressive rates, and non-residents do not get the primary-residence reinvestment relief. Keep every invoice for improvements — they reduce the taxable gain.
A Quick Worked Example
For a €400,000 home bought by a non-resident paying cash: roughly €30,000 IMT (7.5%), €3,200 stamp duty (0.8%), about €700 deed and registry, and say €4,000–€6,000 in legal fees. That is roughly €38,000–€40,000 on top of the price — about 9.5%–10% — before furniture and setup. Plan for it from the start.
The Bottom Line
Madeira can be an excellent place to own, but only if the budget is built on the real, all-in number. The 2026 non-resident tax change in particular rewards buyers who plan their residency and rental strategy deliberately.
If you want a clean, itemised acquisition model for a specific property, we can build one with you before you make an offer.