If you are interested in buying a property in Madeira then this post is for you. The first question that usually arises when considering buying is:
Am I allowed to buy a property in Madeira?
The answer to this question is yes. Regardless of your nationality, you are allowed to buy a property in Madeira. But be careful: there might still be some issues to consider.
What is the first thing I need to do?
Get a Portuguese fiscal number. This tax identification number (known in Madeira as Número de Identificação Fiscal (NIF) or Número de Contribuinte) is required for many official procedures in Madeira – among others opening a bank account and, more importantly for this post, purchasing a property.
Even if you are not planning to move to Madeira permanently, you still need a NIF in order to buy a property. Important to note is that you really need to have it before you are going to sign the contract. I have always postponed applying for a NIF until it was almost too late! Fortunately, I had a really good lawyer who helped me get it in time. My recommendation for you: in case you are really considering buying a house, apartment or plot in Madeira, then try to get a fiscal number the next time you are on the island.
Obtaining a fiscal number is actually a very simple process. If you are an EU resident you can apply for a fiscal number in person at a local tax office (they are called Financas in Madeira) – don’t forget to bring your ID (edit: and a proof of your previous address) with you. I went to the tax office in Funchal which is located in Av. Calouste Gulbenkien 3 (opposite of La Vie) together with my lawyer, my passport, my certificate of registration in Vienna and a bill (I think for the internet in my flat) as a proof that I was actually living in my flat in Vienna. The whole process took around 30 minutes and I payed around 10 Euro for the document. If you have a lawyer, you can ask him or her to do this for you as well. You will need to sign a Power of Attorney document in advance, giving him or her the power to request a fiscal number on your behalf.
What to do when I have found the perfect property?
In case you have found it with the help of an estate agent, tell the agent your offer. The agent will help you negotiate a price. After your verbal offer has been accepted by the seller, you can let a lawyer set up a written agreement which is called the Promissory Contract of Purchase and Sale (Contrato Promessa de Compra e Venda in Madeira). This contract needs to be signed by all involved parties, is legally binding and usually with a down payment of 10-20% of the purchase price. The first time I saw this document I thought it was something like a deed, but it is not! It is just saying that you are going to buy a property for a price and the current owner is going to sell that property to you for that price. I’ve heard stories that people had this contract with the down payment but ended up not buying the property and not getting the down payment back. Honestly, I don’t know whether you will get the down payment back in case you do not buy the property, even for reasons that have to do with the property or the seller, probably not.
By the way, in case you have found your property without an agent, the procedure is still the same. You will have to agree on a price first verbally and then set up the legally binding Contrato Promessa.
The final deed of sale or completion (which is called Escruitura in Madeira) is the last document you will obtain. To get it you will need an appointment at a public notary or a solicitor’s office. The seller and the buyer can both be represented by their lawyers. In my case, I went there with the seller and my lawyer, who also acted as my personal translator. Another important side remark: learn Portuguese!
Is there anything else I need to pay except for the buying price?
Yes there is! As in all other countries, you will have to pay taxes in Madeira as well. You can have a look at this post for more information.
There are many horror stories out there where people lose all of their money when buying properties abroad. So this is definitely something you should keep in mind. Therefore, if you are going to buy a property in Madeira, but are rather new to the island, then try to get a really good, well-known realtor with a good reputation. The only better option is to have a good local friend who is going to help you. Or you try to buy something really cheap, then there isn’t much to lose. Peace out, Hana.