Buying property in Madeira A guide for investors

Madeira has long been known as a paradise island among European holidaymakers. With summer average temperatures of 24C and mild winters, it’s the perfect place to escape for retirees, digital nomads, and other remote workers.

So, if you’re keen to buy property in Madeira in 2025, read our guide that explains everything you need to know before investing in this Portuguese island.


To find out how much a specific property could be generating in passive income, you can use our calculator and get an immediate estimate.


1. What are the requirements for buying a property in Madeira?

To purchase a property in Madeira, you need to prepare and present several documents[1]:

  • Valid identification (passport or national ID).
  • A Portuguese tax number (NIF).
  • A Portuguese bank account.
  • A bank statement from your country (or Portugal) showing you have sufficient funds to complete the transaction.
  • Loan approval documents (if buying with a mortgage).
  • A valid promissory contract (between buyer and seller).

Also, before completing the transaction, you must secure and sign the final deed (escritura) to legally transfer the property to your name. In Portugal, this usually happens in front of a notary. Hiring a local real estate lawyer to help you with this might be prudent.

2. How much tax do I pay when buying a property in Madeira?

The tax you pay to purchase a property in Madeira depends on its value. Known as the IMT purchase tax, all purchases up to €115,509, provided the property will be a primary residence, are tax-free. The following taxes apply to all purchases, which the buyer must pay before the final deed is transferred:

Property value Tax
Up to €115,509 0%
From €115,510 – €158,004 2%
From €158,005 – €215,435 5%
From €215,436 – €359,016 7%
From €359,017 – €688,544 8%
Over €688,545 6%

 

Moreover, a stamp duty fee of 0.8% of the sale price must be paid before the final notarial deed, while all land purchases are subject to a flat rate tax of 6.5%.

You should also be aware of the Portuguese municipal tax system (IMI), an annual municipal charge issued to homeowners for the upkeep of roads, schools, and other public services. The average cost of this tax in Madeira is 0.307% of your property value, but it’s subject to change.

3. How to find a property in Madeira?

There are several ways to find properties for sale in Madeira. You can visit the country on vacation and develop relationships with local realtors in Funchal. But to get a flavour of what’s available, you can use any of the trusted online real estate databases available worldwide, including:

4. Where to buy property in Madeira?

Madeira Island is only 286 square miles, so it’s not difficult to traverse. There are many beautiful spots on the island and several bustling metropolitan areas. So, your chosen location depends on what you’re looking for in a property. Here are some of the best places to buy property in Madeira, with details of the average property price and what rental yields you can expect:

Funchal

Madeira’s beating heart, Funchal, is the island’s focal point, with a prime position overlooking the Atlantic Ocean. Bars, cafes, cultural points of interest, wineries, and more line the streets of Funchal, while students, digital nomads, and local workers call the city home.

The average price per square metre for an apartment within Funchal city centre is €3,619, while the price for properties on the outskirts of Funchal sits at €2,656 on average. Given that it’s Madeira’s capital, yields in Funchal are impressive, ranging from 7.39% to 7.44%, depending on your property.

Buying property in Madeira - Funchal property
GuestReady-managed property in Funchal

Ponta do Sol

Known for its beaches and beautiful villas, Ponta do Sol is the place to buy in Madeira if you’re looking for a much slower pace of life. Home to around 8,000 inhabitants, it’s one of the island’s best diving spots, with stunning beaches and many hiking trails to explore the beautiful outdoors.

This is also Portugal’s digital nomad hotspot, one reason why property prices have increased significantly in recent years.

Property prices in Ponta do Sol currently go for €3,622 per square metre, with yields typically slightly lower than the 7% expected in Funchal.

Porto Moniz

If you’re looking for cheaper properties in a quieter part of the island, head to the northern town of Porto Moniz, where breathtaking views across the ocean and quaint island architecture await. There’s a much slower pace of life here, with a much more local feel to the town than Ponta do Sol, an expat hub.

Property prices in Porto Moniz are also cheaper than in other parts of the island, averaging €2,117 per square metre. If you plan to rent your apartment or home, you can expect decent rental yields between 5% and 6%.

5. What are the pitfalls of buying property in Madeira?

One of the biggest challenges facing foreign buyers is the legal process of purchasing property, including the acquisition of title deeds. This information is in Portuguese, so it’s not easy to interpret. To avoid this, we recommend hiring a lawyer.

Acquiring a tax number and opening a Portuguese bank account are also hassles. These steps aren’t difficult, but they are time-consuming. We recommend learning some rudimentary Portuguese so you can converse with support agents if necessary.

We also recommend thinking carefully about Madeira’s climate. Though the island is known for pleasant all-year-round weather, it has microclimates. In other words, some towns get significantly more cloud and rain than others. We advise you to check this before buying a property to avoid disappointment.


To find out how much a specific property could be generating in passive income, you can use our calculator and get an immediate estimate.


6. Why buy property in Madeira?

There are numerous reasons to buy property in Madeira:

  • A pleasant all-year-round climate that’s ideal for outdoor activities.
  • A digital nomad program that is welcoming to expats and potential investors.
  • The option for tax-free purchases provided the property is valued at less than €115,000.
  • A sought-after slow pace of life with great food, wine, and an island way of living.

7. Is it worth buying a property in Madeira?

Since the introduction of Portugal’s remote visa program and the designation of Madeira as a “digital nomad island,” property prices have skyrocketed. Also, rents have increased significantly, with wealthy nomads arriving for short stays on the island, offering landlords the opportunity to ask for substantially more than their property is worth during the summer months.

If you plan to live in Madeira, it remains one of Europe’s most beautiful islands with a pleasant annual climate and great food. Also, given the high cost of rent, buying is preferable if you can access the capital.

Can foreigners buy property in Madeira?

Yes, foreigners can purchase property without restriction in Madeira, provided they have the correct documentation as detailed above. Moreover, Europeans can spend up to 183 days per year in Madeira without any specific visa, making it an ideal place to own a holiday home.

9. Is now a good time to buy property in Madeira?

House prices across Portugal (Madeira included) rose significantly in 2024, climbing more than 10% throughout the year[6]The market’s performance is attributed to tourism, digital nomads, and other remote workers arriving in the country.

Given Madeira’s reputation as a digital nomad hotspot and Portugal’s popularity as one of Europe’s most visited countries by international tourists, 2025 is undoubtedly a good time to buy on the island.

That said, do your research, consider each area carefully, and hire a lawyer to help you navigate the paperwork, and you should be fine.

10. Market your property with GuestReady in Madeira

GuestReady helps landlords in Madeira connect with short and long-term tenants looking for property rentals on the island. We provide a bridge between landlord and tenant, helping with communication, bookings, and house preparation.

In other words, we take the stress out of the process of finding people to rent your dream home in Madeira. Get in touch with us today if you’d like help with managing your Madeiran property.

Get in touch today for support with your property in Madeira.

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