Mallorca Property :: Buying Tips

BUYING A PROPERTY IN MALLORCA - FREQUENTLY ASKED QUESTIONS

Buying process in Spain
What stages are there in the completion process? The property is selected and the terms agreed on. The property must then be secured. This can be done through private contracts between the two parties. It is customary that 10% of the purchase price is paid at this time. On completion a deed of conveyance “escritura pública” must be signed by both parties under notarial supervision in Mallorca.

Legal Advice in Spain
Is it necessary to appoint a Mallorca notary? Yes. Who pays the legal fees? Notary’s fees are paid by the buyer, and  it is advisable to appoint a local lawyer, who speaks the purchaser’s language who will carry out a title search, and advise the purchaser on all aspects of the investment.

Taxation in Spain
Is there a purchase tax? On new residential buildings there is VAT (IVA) charged at 7% of the value, plus 1% stamp duty, and these are paid by the purchaser. However, on urban plots, commercial premises and some garages (not annexed to a home) purchased from developing or trading companies, VAT is 16%. On re-sales there is a property transfer tax set at 7%. In all cases there is a surplus value tax plusvalia (not to be confused with capital gains tax payable by the seller on the profit made when selling the property). In theory, “plusvalia” is paid by the seller, and is a municipal tax on the increase in value on the land only. However, it may be subject of negotiation between buyer and seller.

Registration
Is it necessary to register the new ownership? Yes, this is done by entering the deed of conveyance escritura publica ( Property Title Deed)at the land register office.

Ownership
Are there different methods of ownership?
Apart from individual ownership, a property can be owned by one or more companies. Owning companies can be Spanish, from countries with double taxation agreements with Spain or offshore or a combination of these.

Professional advice:
The laws and people’s personal circumstances continuously change. These questions and answers are only general, and we strongly recommend that you contact a professional lawyer or financial advisor. Our office would be delighted to recommend reputable professionals in both fields. Please ask our profesional sales team to recomend you an enqglish speaking solicitor in Mallorca.

Annual Property Taxes
I.B.I . (Impuesto Bienes Inmuebles)
This is a real estate tax levied by the local townhall and is usually 0.85% of the cadastral value (valor catastral).

Registration
Is it necessary to register the new ownership? Yes, this is done by entering the deed of conveyance “escritura publica” at the land register office.