Legal advice for the purchase of a property

 

Your new property on Mallorca - Legal advice

Your new property on Mallorca – Legal advice

You have found the property of your dreams in Mallorca. Congratulations.
Now it is important to consider all the details involved in settling the necessary legal agreements. As every real estate deal is different we generally recommend you to consult a lawyer who is familiar with Spanish law in Mallorca (see affiliations). The following key points will give you an idea of what needs to be kept in mind:

1. IBI (Impuesto sobre Bienes Inmuebles) = land tax.

The following must be checked:

Has the IBI (annual land tax) been paid? You will be able to obtain this information from the local authorities in Mallorca. Is the property you are buying a new development? If it is, the seller has to present the following documents: The Declaration of New Construction and a copy of the declaration of alteration of property of an urban nature. This will provide sufficient information for verifying whether or not the details relevant to the payment of the IBI have been registered.

2. Property registration

At the Land register in Mallorca, which is available for public inspection, you can check if the owners of the property or land are registered and if there are any outstanding mortgages or claims against the title holder. We recommend not to buy a property before you have received the current land register information. Your lawyer would do this for you.

3. Contract

In Spain, the initial conclusion of an option deal or a purchase agreement between the buyer and the seller is common practice. This written document includes agreements regarding an advance payment. The notary appointment will then take place within the period of time that has been agreed upon by both parties. Before signing the option deal or purchase agreement the buyer needs to make sure that the property will be free of any mortgage repayments, tenancy agreements, etc. before being handed over. After the purchase agreement has been signed by the buyer and the seller or their authorised representatives in the presence of a notary, the change of ownership will be recorded at land registry.

4. Property owner communities

Should the seller be an owner community, it is important to ensure that all past duties, maintenance costs and community reserves have been paid. The community’s spokesperson should confirm this in writing. A copy of the meeting minutes of the latest proprietors’ reunion can provide you with useful information about maintenance measures, etc.

5. Charges and taxes

The buyer will pay:

According to Spanish law for resale property purchases the buyer has to pay a land purchase tax (impuesto sobre transmisiones patrimoniales, ITP) depending on the purchase price:

Any purchase price up to 400.000 € = 8 % land purchase tax

Any purchase price up to 600.000 € = 9 % land purchase tax

Any purchase price in excess of 600.000 € = 10 % land purchase tax

New build homes are exempt from land purchase tax and instead are subject to a 10 % value added tax (impuesto sobre el valor añadido, IVA) and a stamp duty of 1.2 %.

Furthermore the buyer has to bear about 2.5 % of the purchase price in notary charges and registration fees.

The seller will pay:

According to the balearic island´s regulations the seller has to pay the municipal tax on the value increase of the land, which is based on the increase of the registered value of the plot of land.

Please take advantage of our experience. We would be pleased to give you useful advice and explain the details to you.

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