Mallorca property purchase: We believe it to be the fulfil to walk you through he buying process of a Mallorca Apartment or Mallorca Villa by including you into our example -as the Protagonist. Imagine you have contacted Only Mallorca Real Estate because you are searching to buy a Villa or an Apartment on Mallorca. In response to your enquiry Only Mallorca is going to sent you a personalised selection of Mallorca properties which best match your search criteria. As a further step you may want to organise your visit to Mallorca and viewing appointments with an Only Mallorca property sales consultant who is going to be delighted to show you a selection of Villas and Apartments. At the end of a long day you finally visit this fantastic property which ticks all your boxes, it combines everything you ever dreamed of. Unfortunately the Mallorca property is more expensive than your indented budget. You decide to make an offer. If the sellers accept it, you want to go ahead immediately. Only Mallorca is going to negotiate you offer in your best interest. We know that “only if we all work together and if everybody is happy with the price agreement, we will make the sale”. Just imagine for a moment: The owner accepts your last offer and suddenly you are one step closer to owning your dream home in Mallorca. What comes next, when you purchase Mallorca property?
The Only Mallorca Administration department is capable of setting up option and property purchase contracts and they can prepare all the necessary documents deliberately which are mandatory for the notary signing. The signing of the new title deeds usually takes place within 4-8 weeks after the price has been agreed. Only Mallorca is a real estate company and not a law firm. For this reason we cannot take over any legal responsibilities nor warranties. For this reason we always recommend you to take a lawyer, especially when it is the first time you purchase a Mallorca property. Only Mallorca can provide you with a list of various lawyers that have a proven track record on the island and you should obviously choose the person you feel most comfortable with. Fees should be discussed directly with the law firm of your choice and usually fees amount to 1% of the transaction sum. Your lawyer is going to check if the property is free from any liabilities, debt, outstanding mortgages or loans and will confirm the legal ownership of the estate and check the title deeds. Your lawyers are also going to perform other standard legal checkups -does the property have all the necessary building licenses and certificates, is it correctly inscribed into the land registry, are there any urbanistic infringements? Your lawyer can also inform you about the purchase taxes and other fees and anual taxes while, during and after the purchase. Last but not least your lawyer will be responsable for a smooth transaction and that the property is going to be purchased in an optimal way, legally and fiscally.
Property purchase on Mallorca: As a general rule there are charges of approx. 10% of additional taxes and fees which have to be added to the agreed purchase price. These additional property purchase costs include the government property transaction tax/or value added tax on new properties and plots plus notary fees, inscription into the land registry and administrative fees. Only Mallorca Real Estate can prepare a approximation of the purchase costs as soon as the final race agreement has been reached.
Transmission Tax or VAT: When buying residential property on Mallorca you are obligated to pay a Transmission Tax on used properties or a VAT on new properties. The transmission tax increments progressively with the value of the property:
MALLORCA PROPERTY – TAXES
TRANSMISSION TAX ITP:
• The first € 400,000 of the purchase price will be taxed at 8%
• Between € 400.000,01 and € 600.000 real estate transfer tax is 9%
• amounts betweeen € 600.000,01 und € 1.000.000 will be taxed at 10%
• a sale price of over €1,000,000 will be subject to 11% tax
VAT (Value Added Tax) on Properties:
The VAT on new built properties in Spain is 10%. Garage parking spaces, land and commercial properties are taxed up to 21%
The Plusvalia tax is paid by the seller and it taxes the difference or increase in value of the land since the last property transfer to the future property transfer. It is based on the cadastral value of the property and multiplied by the years of ownership.
Notary fees are progressively calculated on the value of the transaction and usually range between 800 EUR and 2.000 EUR, when you purchase Mallorca property.
There are annual taxes which are charges recurring year when owning property on Mallorca and we highly recommend you to take a tax accountant to handle the payments correctly.
Only Mallorca is not a tax advisor nor a law firm and we do not accept any liability or legal responsibility. We are not responsable for any errors, changes or omissions. For further information we are happy to recommend you a tax advisor or a lawyer.
MORTGAGES AND FINANCING
Only Mallorca maintains long-term business relations with several local banks. Local Banks at present (2015) finance up to 70% on the transaction value or the taxation value (the lowest of both values is valid) for EU Citizens and up to 60% for up to 70% on the transaction value or the taxation value (the lowest of both values is chosen as base for the calculation) for NON-EU Citizens.
EXCHANGE OF CONTRACTS
In Spain there are two different types of contracts that are to be drawn up when you want to reserve your new Mallorca Dream Home.
The Option Contract
The option contract is a binding document where the Seller (gives the option) grants the buyer (takes the option) the right to buy the property within a certain timeframe for a certain price. The option usually has a cost of 10% of the purchase price. When the property is sold in front of the Notary the option fee will be deducted from the full sales price. If the seller does not fulfil the contract he is obliged to return to the full amount of the option fee plus the same amount as compensation to the buyer.
The Private Purchase Contract
The private purchase contract is a binding contract that states that the seller is selling his property to the buyer for a certain price until a certain date. 10% are paid as partial payment. This amount will be deducted from the full sales price once the property is sold in front of the notary. If the buyer does not proceed he looses his deposit. In case of valid private purchase contracts, the seller cannot cancel the purchase or withdraw from the contract and the buyer can legally claim his rights enforce the purchase of the property. This contract is the safest and legally most valuable contract.
THE NOTARY SIGNING
At the notary date Only Mallorca will accompany you to the notarisation. The purchase deed is going to bel be read out by the Notary and will be simultaneously translated into German or English. The agreed purchase price minus the deposit will be paid via Bank certified cheques in front of the notary on the date. These checks will be lodged to the title deed. You are going to receive a simplified copy of the title deed stating your name as the new legal owner; a further copy is transmitted to the land registry in order to inscribe you into the title register. In Spanish law you are the official owner of the property in the moment of the signature.