Buying a property in Mallorca should be well calculated.
Many of the regulations that apply in your home country are different in Spain. In addition to the price of the property, investors face other expenses.
The property has been selected, the financing is in place and the contract could be signed. Before you reach for the pen, however, it is worth taking a look at the additional costs involved in buying a property on the island. The Spanish legislator has built in a few hurdles in terms of additional costs and taxes that repeatedly present buyers with unpleasant surprises.
If you decide to use a Spanish bank for financing, you should bear in mind that they will only finance 80 percent of the property value if it is to be used as your main residence. This requires 20 percent equity to even start the purchase process. You should also factor in the fees that banks charge for taking out a mortgage or opening an account. As a rule, these are two percent of the loan amount.
There are also costs for the notary and the entry in the land register, plus taxes. This item alone usually accounts for an additional ten to twelve percent of the value of the property. Incidentally, these expenses are also incurred if you do not require financing.
Here is an overview of the additional costs when buying real estate:
Notary costs
Signing the real estate contract in front of a notary is mandatory. The notary issues the public deed of sale (escritura). There is a fee schedule that is based on the purchase price, so the choice of notary is up to you.
Grundbucheintrag Mallorca
The deeds issued by the notary must be registered. These fees also depend on the value of the property.
Taxes when buying a property
The Spanish tax authorities differentiate between the purchase of a new-build property and a previously owned property. VAT (impuesto sobre el valor añadido, IVA for short) currently amounts to ten percent of the property price in the Balearic Islands. In addition, there is the notarization tax (actos jurídicos documentados, AJD for short) for new-build properties. On Mallorca and the neighboring islands, this is currently 0.5 percent of the purchase price.
The most important tax on a second-hand property is the real estate transfer tax (IPT). It is levied on the purchase price of the property and currently amounts to eight percent in the Balearic Islands.
Additional costs Malloca Real Estate
If you intend to take out a home loan to purchase the property, you cannot avoid the appraiser. This appraiser will value the property. In some cases, the bank will cover the costs, which are currently between 250 and 600 euros. An appraisal is valid for six months after it is issued.
If you want to keep paperwork to a minimum, we recommend hiring a gestor. This is particularly beneficial for foreign investors who speak little Spanish. The fees are flexible - it is worth finding out the costs from different gestors.
