For American buyers, Madeira became a direct flight away in 2025, and that matters for a second home. United’s seasonal non-stop from Newark put the island within one flight of New York. The purchase itself is open to Americans on the same terms as anyone else. What makes an American buyer different is the tax system they take with them: the US taxes its citizens wherever they live, and there is no estate tax treaty between the US and Portugal. This guide sets out what that means for an American buying a Madeira home from EUR 2M.
United, seasonal, since 2025
US-Portugal, effective 1996
Between the US and Portugal
IRS and Portuguese law
Last updated: October 2026
By: Alexander Thornbury
Why are Americans looking at Madeira?
Access, mostly. In June 2025 United began a seasonal non-stop service between Newark and Funchal, three times a week, and has kept it for 2026. Outside the season, an American buyer connects through Lisbon or another European hub. One flight from the New York area changes the calculation for a second home, and Madeira’s airport handled a record 5.4 million passengers in 2025, with the US route among that year’s new summer services.
The island itself is part of the appeal: EU and euro, a subtropical Atlantic setting, and a capital, Funchal, with international schools and a mature property market. Official data put the Funchal median at EUR 3,601 per square metre in early 2026, up 23% in a year, though medians are not prime prices. Our international buyer’s guide to Madeira explains what the numbers do and do not show.
How long can an American stay?
Up to 90 days in any 180-day period across the Schengen area, which includes Madeira. Owning a home does not extend that, and since October 2023 buying property in Portugal does not lead to a residence permit either. To stay longer, the usual route for an American with investment income, pensions or rental income is the D7 visa, followed by a residence permit from AIMA, Portugal’s immigration agency. The D7 income bar is pegged to the Portuguese minimum wage, EUR 920 a month on the mainland in 2026.
Moving to Madeira has tax consequences on both sides of the Atlantic. Portugal treats you as resident if you spend more than 183 days there in a 12-month period, or keep a home that looks like your habitual residence, and then taxes your worldwide income. The US keeps taxing you anyway, as a citizen. Our Madeira residency guide sets out the Portuguese side in full.
| For an American buyer | The position |
|---|---|
| Time in Madeira | 90 days in any 180 without a visa; D7 to stay longer |
| Transfer taxes | 7.5% IMT plus 0.8% stamp duty as a non-resident |
| US tax on rent and gains | Reported on the US return, with credit for Portuguese tax |
| Income tax treaty | Signed 1994, effective 1 January 1996 |
| Estate tax treaty | None between the US and Portugal |
What do you pay in Portugal?
As a non-resident, about 8.3% of the price to buy: EUR 166,000 on a EUR 2M home, from a flat 7.5% IMT and 0.8% stamp duty. For US purposes those transfer taxes go into your basis in the property, since IRS Publication 551 lists them among the settlement costs you add, so they reduce the gain you report when you sell. Annual tax is light: IMI at 0.3% of the tax office’s valuation, and AIMI only above EUR 600,000 of it, or EUR 1.2M for a married couple taxed jointly. Portugal has no general wealth tax.
Letting income pays a flat 25% in Portugal for a non-resident, and Funchal no longer accepts new holiday lets in apartment buildings. On a sale, Portugal taxes half the gain at its progressive rates. Our Madeira property tax guide covers each charge, and our step-by-step buying guide shows when each is paid.
How does the US tax a Madeira home?
As part of your worldwide income, wherever you live. The US taxes its citizens on worldwide income and gains, so rent from a Madeira property and any gain on its sale belong on your US return, with a foreign tax credit for Portuguese tax paid on the same income. The US-Portugal income tax treaty, signed on 6 September 1994 and effective from 1 January 1996, confirms that Portugal may tax income from real property located there; the US then relieves the double charge through the credit system.
The reporting matters as much as the tax. A Portuguese bank account for the purchase and the running costs brings US foreign-account reporting with it, under the FBAR rules and FATCA. None of this is unusual for Americans with assets abroad, but it is worth setting up correctly from the start, with a US tax adviser who knows Portugal, rather than unpicking it later.
What about estate tax and inheritance?
Start with the gap: there is no estate or gift tax treaty between the US and Portugal. The US has estate tax treaties with 16 countries, and Portugal is not among them. In practice the gap matters less than it sounds for most families, because Portugal has no inheritance tax as such. Its 10% stamp duty on inherited Portuguese assets exempts spouses, partners, children and parents, so a Madeira home passing within the close family usually pays nothing in Portugal, while the US estate tax applies to a citizen’s worldwide estate as it would anyway.
The legal side needs more care than the tax. Portugal has forced-heirship rules that reserve part of an estate for close family, up to two-thirds where a spouse and children survive. A foreign national can choose the law of their nationality in a will under the EU Succession Regulation, which applies to Americans as much as to Europeans; for a US citizen that will usually mean the law of the state you are most closely connected with. Make the choice explicit in writing, because without it the default rules can bring Portuguese forced heirship to bear on the Madeira property.
| Event | Portugal | United States |
|---|---|---|
| Rent | 25% flat for non-residents | Taxable for citizens, foreign tax credit |
| Sale | Half the gain at progressive rates | Taxable for citizens, foreign tax credit |
| Death | 10% stamp duty; close family exempt | Estate tax on a citizen’s worldwide estate |
| Golden-visa fund | EUR 500,000 qualifying fund, not property | Generally a PFIC: Form 8621 each year |
Is the golden visa worth it for an American?
Only with US tax advice first. Property no longer qualifies for Portugal’s golden visa; the main route left is a EUR 500,000 investment in a qualifying Portuguese fund that does not invest in real estate. For an American, those funds are generally treated as passive foreign investment companies under US tax law, which brings annual reporting on Form 8621 and, without the right election, a punitive regime on gains and distributions. A qualified electing fund election can mitigate it, but it has to be planned from the first year.
For many American buyers, the simpler path is to treat the house and the residence question separately: buy the Madeira home as a non-resident, use the 90-day allowance, and move to a D7 only if and when you want to live there. If you are weighing Madeira against other European markets, our comparison of Madeira, the Algarve and Mallorca sets the three side by side, and our guide to Madeira’s prime areas shows where on the island to look.
Key takeaways
- United’s seasonal Newark-Funchal non-stop, running since June 2025, put Madeira one flight from New York.
- Americans buy freely, pay about 8.3% in Portuguese transfer taxes as non-residents, and get no residence right from owning.
- The US taxes Madeira rent and gains on your return, with credit for Portuguese tax under the 1994 income treaty.
- There is no US-Portugal estate tax treaty, but Portugal exempts close family from its inheritance stamp duty.
- A will choosing your US state law is the guard against Portuguese forced heirship.
- Golden-visa funds are generally PFICs for US tax; take advice before choosing that route.
Frequently asked questions
Can Americans buy property in Madeira?
Yes. Portugal places no restrictions on foreign buyers, so Americans buy on the same terms as Portuguese citizens. You need a Portuguese tax number, and non-residents outside the EU can use the tax authority’s electronic notifications instead of a tax representative.
Is there a direct flight from the US to Madeira?
Yes, seasonally. United began a non-stop service between Newark and Funchal in June 2025, three times a week, and has kept it for 2026. Outside the season, connections run through Lisbon and other European hubs.
How long can an American stay in Madeira?
Up to 90 days in any 180-day period across the Schengen area. Owning property does not extend this. Longer stays need a national visa, usually the D7, and then a residence permit.
Does buying property in Madeira give an American residency?
No. Property stopped qualifying for Portugal’s golden visa on 7 October 2023. Americans who want to live on the island usually apply for the D7 visa.
What taxes does an American pay to buy in Madeira?
About 8.3% of the price as a non-resident: a flat 7.5% IMT and 0.8% stamp duty, both on the higher of the price and the tax office’s valuation. Legal and registration costs are extra.
Do I report a Madeira property on my US tax return?
Rent and gains, yes. The US taxes citizens on worldwide income and gains, with a foreign tax credit for Portuguese tax. A Portuguese bank account also brings FBAR and FATCA reporting.
Is there a US-Portugal tax treaty?
There is an income tax treaty, signed on 6 September 1994 and effective from 1 January 1996, which lets Portugal tax income from real property there. There is no estate or gift tax treaty.
Will my heirs pay Portuguese inheritance tax on a Madeira home?
Not if they are close family. Portugal has no inheritance tax as such, and spouses, partners, children and parents are exempt from its 10% stamp duty on inherited assets. US estate tax applies to a citizen’s worldwide estate regardless.
Does Portuguese forced heirship apply to Americans?
It can, unless your will chooses the law of your nationality under the EU Succession Regulation, which for a US citizen usually means the law of your state. Make the choice explicit in writing.
Are Portuguese golden-visa funds a problem for US taxpayers?
They can be. They are generally treated as passive foreign investment companies, which means annual Form 8621 filings and, without a qualified electing fund election, punitive tax on gains. Take US tax advice before investing.
Where should an American buyer look in Madeira?
Funchal, for schools, services and the deepest market, and the east of the island near the airport for frequent travellers. The sunny south-west and Porto Santo suit buyers after space or a beach.
Sources
- Portal das Finanças – IMT Code, article 17, including the 7.5% non-resident rate added in 2026
- Diário da República – Decree-Law 97/2026 (IMT for non-residents)
- Portal das Finanças – IMI Code, article 112 (IMI rates)
- Portal das Finanças – IMI Code, article 135-F (AIMI rates)
- Portal das Finanças – IRS Code, article 43 (gains counted at 50%)
- Portal das Finanças – IRS Code, article 16 (tax residence)
- EUR-Lex – EU Succession Regulation 650/2012
- Diário da República – Law 56/2023 (end of the property golden visa)
- INE – house price statistics at local level, first quarter of 2026 (released 17 July 2026)
- ANA Aeroportos de Portugal – Madeira airport passes 5 million passengers in a year for the first time (2025)
- ANA Aeroportos de Portugal – United’s Newark-Madeira route from June 2025
- IRS – Publication 551, basis of assets (transfer taxes as settlement costs)
- IRS – US-Portugal income tax treaty; estate and gift tax treaties; Form 8621 (PFIC); FBAR
- Portuguese consular services – the D7 visa
Figures current at October 2026. US and Portuguese tax rules interact in ways that depend on your circumstances; confirm your position with a US tax adviser and a Portuguese lawyer before you buy.
About the author
Alexander Thornbury is a published author who writes on international property, tax and residency for high-net-worth buyers across Europe. His work focuses on the practical mechanics of cross-border purchase: what a buyer actually pays, owes and signs. More at alexanderthornbury.com.