The services of a qualified real estate agent will take a lot of work off your shoulders and ensure that the purchase process is handled smoothly. The procedures in Mallorca when buying a property are different from what you might know from the UK. A real estate agent saves you a lot of time and effort. He will find the right property for you and also has access to properties that are not offered on the Internet.
Of course you are free to contact several estate agents. However, here in Mallorca most of the real estate agents offer the same properties, as there is no agent exclusivity. It is important that you find a qualified estate agent you can trust. Even if you do not find your dream property on our website, we can help you find it thanks to our wide range of contacts.
Having a lawyer is not compulsory when buying a property in Mallorca. You are free to choose a lawyer. In preparing the signing of a purchase contract we as your real estate agents are making sure that there are no hidden flaws, such as missing building permits or illegal development. We will check all documents carefully and accompany you during the entire purchasing process and beyond. Should you still wish to consult a lawyer, we will be happy to assist you in your choice.
Mortgages are very popular in Spain as interest rates are low and mortgages can have tax advantages. As a foreigner you have the possibility to get up to 70% of the appraised value of a property for a mortgage. All costs of obtaining a mortgage must be paid by the bank at the time of the mortgage application.
The NIE number (Numero de Identificación de Extranjeros) is a multifunctional identification and tax number in Spain. It is only valid for foreigners and only foreigners can apply for it. The NIE number is required if you wish to buy property in Spain or if you are emigrating to Spain. You also need the NIE for contracts (opening a bank account, mobile phone contracts, etc.).
When signing an option contract, the seller is obliged not to sell the property to third parties for a certain period of time. As a rule, the buyer pays 10% of the purchase price for this option. The buyer can thus keep the option open to withdraw from the deal if necessary. Should the buyer withdraw, the seller usually insists on keeping the option premium paid.
A notarised deed must be made to ensure that the sale is registered in the land register. This notarial deed of sale is called escritura publica.
The notarial deed contains a description of the property, the purchase price and the payment terms. It also ensures that no debts (encumbrances) are taken over from the previous owner. The notary sends the deed to the property register by email or fax to ensure legal certainty. After payment of the land transfer tax, the new owner can be entered in the land register.
The commission (brokerage fee) is usually paid by the seller, the amount is 5% to 6% of the purchase price plus VAT. By arrangement or in exceptional cases, the commission can also be paid by the buyer.
As a buyer of property in Mallorca there are a number of costs that you will have to pay in addition to the price of the property. A rough estimate of these costs is around 10% - 12% of the purchase price. This amount is made up of taxes and costs for estate agent, lawyer, tax consultant, notary and the fees of the municipal offices.
When you buy a property, you have to pay value added tax (IVA) or land transfer tax (ITP).
VAT: When you buy a property for the first time, you pay VAT (IVA). If you buy a property with garage parking spaces, you have to pay 10% tax on the purchase price. If you buy a plot of land or a commercial property, the tax is 21%.
Real estate transfer tax: Real estate transfer tax (ITP) is payable on resale properties.
- the first € 400,000 of the purchase price is taxed at 8%.
- between € 400,000 and € 600,000 the real estate transfer tax is 9%.
- the amount between €600,000 and €1,000,000 is taxed at a rate of 10%.
- a purchase price over € 1,000,000 is taxed at 11%
The tax must be paid within 30 days of the transfer of ownership.
Property tax: Property tax (IBI- Impuesto sobre Bienes Inmuebles) is paid annually at the end of the year. Throughout Spain, it varies between 0.4% and 1.1% of the cadastral value of developed land, but the exact value depends on the municipality in charge. For undeveloped plots, you have to pay between 0.3% and 0.9%.
Income tax: If the property is used by the owner, even if only for holiday purposes, an income tax is paid (IRPF - Impuestos sobre la Renta de la Persona Física). The tax is 19% on 1.1% of the cadastral value.
Wealth tax: non-residents pay between 0.2% and 2.5% wealth tax. The wealth tax for residents in the Balearic Islands ranges from 0.28% to 3.45%.
Capital gains tax: A capital gains tax (plusvalia) must be paid on the sale. From the moment a property is sold, the municipalities tax the increase in value of the property.
