Take a look at our page Buying a property in Mallorca as it outlines the process. It is fairly straightforward and properties can change hands quite quickly.
Based on the value of the property declared in the purchase contract (escritura) at the notary there is a scalable rate of taxes when buying a property in Mallorca. In 2019 the rates of this tax are:
These taxes are payable only on the property itself. Other items such as furniture and fittings are paid at flat rate of 4%. Talk to us for further information.
Upon completion, a seller is liable for two types of tax:
In British terms, IBI is equivalent to council tax and provides for the provision of services locally such as schooling, infrastructure, local services and facilities. Basura is another annual tax specifically collected in respect of rubbish and disposal of waste in the municipality. In Calvia IBI & Basura are collected annually in July/August.
The notary is an official that acts as an independent overseer of the documents and contract between seller and buyer, it is their responsibility to advise either party of the implications of the clauses of the contract and ensure that both sides understand the contract fully. The notary has specific legal powers to endorse documents, ensuring that they comply with the local regulations and therefore validating the contents of the agreement. They are not lawyers though and it is advisable to although not mandatory to use a lawyer in a property sale/purchase.
The notary meeting to buy or sell is a rather formal and well organised even that brings together the seller(s) and the buyer(s) of the property. Both parties will sit around a conference style table and the notary will proceed to read the contents of the sale/purchase contract. Each party can ask questions to clarify any doubts they may have. When all details are agreed and confirmed, the notary will ask each owner/buyer to sign the escritura (deeds of purchase) and then also counter sign the document themselves to validate it legally. At this point, the sellers will hand over the keys and the buyers will hand over the pre-prepared bankers drafts to conclude the sale & purchase. At this point, possession of the property is passed from seller to buyer.
Indeed you can. Mortgages are freely available to both residents and non-residents. We have an excellent relationship with an English-speaking mortgage broker that can help you. New EU legislation in 2019 means the mortgage process is more like that in the UK and is based on buyer affordability. Non-residents can expect to borrow 70% of the total property price, residents can borrow up to 100% in certain circumstances.
Yes. It is best to get a Spanish account. For the actual property purchase it is not necessary but once you have your NIE set one to pay monthly bills and yearly taxes.
An NIE (numero identificacion extranero) or foreigners number, is like a National Insurance number but much more. It’s a reference issued by the Spanish government that follows you for life, enabling the tax, property register, banks and other institutions to find your details quickly and easily. All foreigners owning property, cars or accounts in Spain require a NIE number.
You can get an NIE through the Spanish Embassy in your country. There are also numerous places including local notaries that will work with you to get an NIE here in Spain but you need to wait for appointments to become available at the local police station that you will have to attend with the notary, your passport and address. It is best to work with someone who speaks Spanish as forms need to be filled out precisely in Spanish.
Having an NIE does not make you a resident.
Yes. Regardless of whether the owner will be able to attend the signing of the deed at the notary’s office, it is highly recommendable to grant a power of attorney for sale and tax representation in favour of a lawyer. This document will authorise them to carry out a large number of procedures on your behalf, such as cancelling and transferring utilities contracts, cancelling direct debits, cancelling insurance policies, notifying the Town Hall and the community of property owners of the conveyance, processing the cancellation of your mortgage at the Register, submitting your tax statements, and requesting any return for which you may be eligible.
It can be very quick if no legal issues arise. You can expect from the point of signing an option contract where you pay your 10% deposit to have around 4-6 weeks until completion. Remember, the option contract dictates this timescale, so both parties should agree dates.
The 3% retention is a tax which is payable when a non-resident sells a property in Spain. The buyer of the property is required to retain 3% of the purchase price and deliver it to the tax office. The non-resident seller is able to make a claim to have the 3% returned to them. This is done in order to prevent non-residents leaving the country without paying their obligation to capital gains tax.