Mallorca, property, real estate, Spain |
31 Mar 2015
Buying a Property in Mallorca
Buying process in Spain Once you have found the property you love, it is time for the paperwork. 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 notary's supervision in Spain.
Legal Advice in Spain 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.
NIE Numbers All non-Spanish citizens require a personal identification and tax number to buy a property, referred to here in Spain as an NIE number. This can take some time (estimated between 3 and 6 weeks) so we recommend you apply early. Please note this does not affect your status in your home country. You can either apply for an NIE yourself at the Department of Extranjeros (Foreigners Department) ensuring you take your passport, or through your chosen legal advisor. Non EU applicants should contact their embassy for details of application.
Taxation in Spain As a simple rule, when buying a property in Spain if you allow approximately 10%-12% on top of the asking price you will normally end up with some change in your pocket. This will include Property Transfer Tax or VAT*, Notary and Land Registry fees, solicitor fees as well as any possible mortgage costs.
Property transfer tax & Stamp duty On re-sales there is a property transfer tax set at on the following sliding scale:
Purchase price up to 400.000 € is 8% Purchase price from 400.001€ to 600.000 € is 9% Purchase price from 600.001€ and more is 10%
*Vat & Stamp duty For first sale of newly built properties VAT is 10% and 1.2% Stamp duty. For commercial property and first sale of a building plot, or a plot sold from a company Vat is 21% plus 1.2% Stamp duty
Registration The registration of the property is done by entering the deed of conveyance "Escritura Publica" at the land register office.
Completion Completion can take place on whatever date you and the seller agree upon, from as little as one week (as long as you get the mortgage company to agree) up to one year if desired, from the date of signing the Option Contract. This date will be detailed in the Option Contract.
If the purchase is financed by a mortgage, the bank representatives will be present in order to authorise the new mortgage and pay the seller. If you are not able to attend on the specified date you are able to grant your solicitor/lawyer power of attorney so he or she can complete on your behalf.
Completion will take place between the relevant parties in front of the Notary who will witness the signing and transfer of the title deed or Escritura de Compraventa. The Notary acts for neither party specifically, but is a government official responsible for the execution of public documents; He/she will confirm the identity of both parties, and will check the Land Registry to verify legal ownership and that there are no out-standing debts or orders against the property.
The balance of the purchase price will be paid to the seller at this time, and any remaining purchase tax and fees will also be paid if going through a mortgage provider (if paying in full these taxes need only be paid within the month). The Escritura will then be registered by the lawyer in the corresponding Property Register. Once the Deed is signed you will be given the keys to your new property and a copy of the title deed, until the formal deed comes to you from the land registry (or via your Mortgage provider if they have acted on your behalf).
Congratulations! - it's yours½home sweet home. Sit back and raise a glass of bubbly or two in celebration!
If you are interested in buying property in Mallorca and would like to speak to one of our sales team then we are happy to give any assistance you may require. Contact us