How to buy a property in Mallorca?
Before you start looking, it is important to make sure you have the funding ready. If you need information about this, you are welcome to email us and we will help.
Once you have found a property that you want to move on with, it is recommended to hire a reliable lawyer who can, along with your real estate agent, help you through the process.
The first step is always to place an offer. Once the offer has been approved, a “purchase agreement” is being prepared. In connection with the signing of this agreement, it usually requires you to pay 10% of the entire purchase price in a down payment and thereby commits you to the sale.
If the buyer does not complete the sale the deposit will normally not be refunded. If the seller backs out, they must normally repay the down payment plus an additional 10% off the purchase price. Usually, it is the buyer’s lawyer who prepares the contract for the purchase agreement and at the same time ensures that all documents are in order and that there are no loans, fees and taxes that are unpaid.
-Note, when buying a new construction “off plan” it often requires payment in stages.
Before taking over the apartment, all paperwork and documentation must be ready. You will need the following to complete the purchase of the property:
-Apply for a so-called NIE / tax number as a foreign buyer. (Contact us for more information about this)
– A Spanish bank account. The final transaction is made in Spain by a notary. The money must therefore be transferred to your Spanish bank account in good time before the completion of the property.
Completion:
All documents to be represented must be in order before access otherwise the sale will not go through.
If you are unsure that you can attend the of completion, you can, for example, give your lawyer a power of attorney to act in your name.
Costs when buying a property:
A buyers closing costs are going to be approximately 10-14% of the purchase price. This number will vary depending on whether or not you are buying a new construction, the purchase price of the property and If you are using a lawyer. We always recommend our clients to use a lawyer and we can provide you a good option on these.
What are the taxes and frees I am paying for?
-Real Estate Transfer Tax: (This Tax is on the sale of second-hand properties) The tax rate will change according to the purchase price that appears in the deeds. Its between 8% and 11%
Note: If a garage place is not attached to the property it will be taxed separately.
VAT – Value added Tax: Only applied when buying a new construction. Right now its 10% on the purchase price.
Stamps Duty tax: generally 1,2% of the purchase price.
Lawyers´ fees: are normally 1% + VAT of the purchase price.
-Note. Some lawyers might have a minimum fee of 2500-3000 euro +VAT.
A property inspection: is not required but is highly recommended if you are buying a villa. The cost is approximately 1000-2000 euros depending on what kind of inspection and the size of the property.
Taxes when owning a property:
Property tax (IBI): Annual property tax to the Town Hall. The amount depends on the municipality and is based on the cadastral value of the property. Tax rate is issued by the Town Hall.
Rubbish collection (Basura): Costs vill vary but normally between 100 and 200 euros per year depending on the size of the property.
Wealth Tax: Rate depends on the value of your assets.
Income tax for non-residents: A tax declaration need to be presented each year by all non-residents in Mallorca.