Important things to know when buying property in Mallorca
Here a a few key points to bear in mind when buying property in Mallorca. Our team of professionals are on hand to help with any questions about the buying process, the legal requirements and top tips for a smooth buying experience.
The buying process in Mallorca
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 Mallorca
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.
Is there a property purchase tax?
In any property transaction in Mallorca there is a Tax implication depending is the purchase is between private persons or developers.
- TRANSFER TAX (Impuesto de Transmisiones Patrimoniales-ITP)
- The ITP – Transfer Tax is imposed on civil and not mercantile operations.
In purchases/sales between private persons onerous transfers of properties (TPO = Transmisiones Patrimoniales Onerosas) are completely incompatible with VAT. When TPO is paid cannot incur VAT.
Schedule of the tax
In onerous transmissions of real estate properties and in the constitution and granting of real rights are applied the following rates (the part charged with 7% is dispensed):
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.
Property Rates of the tax
- Transmission of a property in Mallorca 10% V.A.T.
- Transmission of a garage or plot 21% V.A.T.
- Transmission of the housing + up to 2 garages 10% V.A.T. (in case there exists a third garage, only this one tributes on 21%)
This tax is collected by the national fiscal authority.
Registration & Ownership of the properties
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.
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.
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 real estate sales team to recommend you an english speaking solicitor in Mallorca.
Quiet location plot for sale in Valldemossa with mountain view and sea views
- Plot size 943,519m2
Quiet location apartment for sale in Palma de Mallorca with roof terrace
- Bedrooms 2
- Built size 83m2
House for sale in Pollença
- Bedrooms 3
- Built size 160m2
- Plot size 263m2
Close to all amenities apartment for sale in Puerto de Alcudia with good rental potential and tennis court
- Bedrooms 1
Full of character house for sale in Campanet with garden and pool view and mountain view
- Bedrooms 4
- Built size 270m2
- Plot size 1,300m2
Port de Pollença house for sale with covered terrace and sunny terraces
- Bedrooms 5
- Built size 254m2
- Plot size 6,552m2