We have compiled current legal information for real estate purchases. We would like to give you some visual support even prior to you making your considerations. We are at your disposal at any time for follow-up questions.
Incidential costs that are iincurred for the purchase of a property on Mallorca:
1. Transfer Tax
In principle, when buying a Mallorca property
the Spanish VAT tax IVA (Impuesto sobre el Valor Añadido)
the ITP transfer tax(Impuesto sobre Transmisiones Patrimoniales) is payable.
When buying from a company (e.g. property developer), the IVA (VAT tax) is payable.
The IVA is paid directly to the seller for a sale.
The general IVA-rate is Satz beträgt 21 %, this applies to the purchase of undeveloped plots on Mallorca.
The reduced IVA rate is 10 %; this applies to the purchase of apartments or homes on Majorca.
In addition to the IVA, an additional 1.2% is incurred for a document tax, the AJD (Actos Jurídicos Documentados).
For a purchase by a private person, ITP (similar to the German land transfer tax) is payable.
The following ITP tax rates apply to the Balearic Islands since 1 January 2013 :
Up to a purchase price of 400.000 €: 8 % of the purchase price
From a purchase price of 400.000,01 € to 600.000 €: 9 % of the purchase price
From a purchase price of 600.000,01 to 1.000.000 €: 10 % of the purchase price
From a purchase price of 1.000.000,01 €: 11% of the purchase price is payable.
2. Withholding tax of the seller (retención)
Rules for buyers who are not residents. Here the buyer is obligated to withhold 3% of the agreed-upon purchase price and to pay i to the tax authority as an advance tax payment for the seller. That is because non-residents must tax the possible gained revenue as part of an income tax return.
3. Incremental Value tax (plus valía)
Plusvalia describes the incremental value increase of the land and soil (not the property) since the last transfer. Thus this tax ends up being rather minimal for owner- occupied flats (condominiums) on Mallorca. The amount of the tax is determined by the municipality charter. They will appraise the added incremental value for you before the purchase. We will contact the municipality for this purpose. The tax will be reimbursed by the seller. In the contract, we will stipulate that this tax is to be assumed by the owner. Recently, the buyer has been obliged to submit a copy of the purchase agreement to the municipality. In order to ensure that the seller also meets his payment obligation (because if he does not, the buyer is liable, the calculated plusvalia amount should be withheld as part of the purchase price agreement to the municipality. Thus, in practice, if the seller is non resident the plusvalia is withheld in the purchase price payment from the buyer.
4. Notary and land registry costs
There is a fee ordinance that prescribes the amount of fees depending on the Mallorca property for notaries and property registration entries. For a purchase, the notary and registration costs are approximately 1% of the purchase price.
For your purchase of a property, you can assume around 11% -13% ancillary purchase costs.
These costs consist of the taxes, lawyer, gestoria, notary and the fees from the authorities.
In any case, we recommend that you consult a lawyer specializing in real estate law.
Status: January 2018
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