What do I need to buy a property in Mallorca?
To be able to buy and own a property in Spain you need a NIE-number (Número de Identidad de Extranjero) which is similar to a Spanish social security number but for foreign citizens. You can get the number either at the Spanish embassy in your country or in Spain.
It is common, but not mandatory, to hire a lawyer when buying property in Mallorca. Many choose to do so, since it is both a reassurance and a security. A lawyer can control that the paperwork is in order, advise you on the process if any questions should arise and also advise you regarding taxes and inheritance. A lawyer can also help you get your NIE-number.
Before you start looking for your dream property, it is good to determine how big an investment you can make. It is best if you have already discussed this with your bank. When you find the property that you are looking for, things usually move quite fast, and then it is good to have everything ready to ensure a smooth transaction.
What are the steps in the buying process?
Once you find the property you have been looking for and you and the seller agree on a price, you usually sign a private agreement. This specifies all the information about the purchase, the price, date of access etcetera. In connection with signing the agreement, the buyer pays a down payment, normally 10% of the purchase price. If you have hired a lawyer, which is recommended, he or she will check that everything is in order before the agreement is signed. The down payment secures the purchase and the property is marked as reserved.
After the agreement is signed, you normally have about 1-2 months until the closing date, where you pay the remaining part of the purchase price.
Is the asking price a set price?
In Spain, it is not as common with a bidding war. A deal is closed when the buyer and seller agree on a price. Although, it is important to know there is no requirement for transparency in the bidding process, which means that the owner can negotiate with multiple parties at the same time.
Do different realtors have different prices?
Even if the property is for sale with several realtors, theprice is the same. Should you find the same apartment or house at a different price, it is probably because it has not been updated after an increase ordecrease. In the end, it is the same property, the same owner – and the same price.
Can I apply for a mortgage in Spain?
Yes. Normally the Spanish banks grant loans of 60-70% of the official value of the apartment, that is the lowest value of the purchase price, based on an inspection made by an independent valuator selected by the bank.
When is the best time to buy?
There really is no time better than the other. Most people buy and sell in the spring and in the fall, but it is just as good to buy all year around. There may even be advantages in buying during the less busy periods.
Can I get the down payment back if I change my mind?
In the unlikely event that you change your mind and decide not to go through with the purchase, even after signing a private agreement, you will lose the down payment. Should the seller withdraw from the deal, he or she needs to pay back the down payment, and double it.
Are there any additional costs?
Besides from the actual purchase price, there are certain additional costs you will have to pay when you buy a property in Spain.
There is a 8-11,5% transfer tax, depending on the purchase price. The lower the amount, the lower the tax.
Then there is the cost of the notary and the land registry.A lawyer can help you calculate the exact amount, but the costs in full usually sums up to around 10-12% of the purchase price.
Example:
500.000 € new production
10% VAT = 50.000 €
1,2 % transfer tax = 6000 €
Notary: circa 900 €
Registration of deed: 700 €
Administration: circa 550 €
Lawyer 5.000 +VAT 21% = 6050 €
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64.200 € = 12,849%
500.000 € Second hand:
8,2 % transfer tax = 41.000 €
Notary: circa 900 €
Registration of deed: 700 €
Administration: circa 550 €
Lawyer: 5.000 +VAT 21% = 6050 €
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49.200 = 9,84%
How much tax do I need to pay?
In Spain you pay a wealth tax for properties with a net value over 3,000,000 euros per person. And then there is the annual property tax, known as IBI, Impuestos Bienes Inmuebles, and a small annual garbage fee.
Do I have to be present in person?
Ofcourse, it is easier if you can be there in person, but there are various ways to do it if you can not be there. We can close the option contract by email. The transfer can also be done electronically. If you can not attend the signing at the notary, your real estate agent or your lawyer can represent you with a power of attorney.
What is included in the monthly cost?
If the property has a monthly cost, it is only the costs of the community that is included, such as cleaning and electricity for common areas, gardening etc. The more services the community has, the more elevated the monthly cost will be. The costs for insurance, electricity, water, gas and heating corresponds to each owner.
What is the difference between tenant ownership and condominium?
A tenant ownership means you do not own the apartment itself, but instead becomes a part-owner in the housing cooperative, and the board needs to approve new members. There are also collective mortgages on the property. In Spain you instead own the actual apartment and it is counted as a property. There is often an external administrator who handles the financial issues in the building. Smaller repairs and renovations are normally paid from a common fund, while larger renovations are financed through contributions from the owners, which you pay according to your share.
