With over 18 years experience in the Mallorca real estate market we have gained a well-earned reputation for a discreet, honest, professional, and dynamic approach. We have a wide range or contacts in all areas, from lawyers and tax advisers, mortgage brokers, banks, construction companies and architects to interior designers, IT professionals and handymen. The purchase of a property is so much more than finding you a house, it’s fulfilling you and your family’s dream and being part of the journey to help to create a future home and dream life when in Mallorca.
Buying a property in Spain can be very different to buying a property in you home country. Firstly you need to ensure that the location you are looking to establish your new home is the right location for you, despite someone else’s recommendations. Then you will need to navigate the sheer volume of agents out there trying to sell you the same houses, since it is rare that a property is ever exclusive with one agent due to the nature of the multi-cultural market place. We will firstly set out to get to know you and your family’s lifestyle preferences and desires, and will then be there to guide you every step of the way, with an all-important unbiased approach. Firstly in familiarising you with the best locations that suit your criteria, and then liaising on your behalf with any off-market properties and all the main agents on the island, to ensure we find the ideal property for you, your family and lifestyle requirements long into the future.
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To be able to buy and own a property in Spain first and foremost you will need an NIE number (Número de Identidad de Extranjero) which is similar to a Spanish social security number but for foreign citizens. (You also need one to buy a car, or any large item of expense). This number must exist before the public deed can be signed and the transaction finalised. So, it should be in place as early as possible in the process and takes 3-4 weeks to receive. We will take care of this utilising a colour copy of your passport through our connections.
Once we obtain a full picture of what you are looking for a selection of properties will be sent to you, each time gaining a clearer picture of your requirements and tastes. Once a viewing date is chosen, a schedule will be compiled which will include a combination of property viewings and location familiarisation, as well as a few ‘out of the box’ suggestions to ensure you are making the right decision. We can help to recommend a suitable hotel, car hire or limousine, and ensure you are looked after upon arrival through to departure including restaurants and leisure time – you won’t need to worry about a thing.
It is common and highly recommended to appoint a local recommended lawyer to represent you in your purchase transaction, who can advise you on all legal aspects of one of the largest investments amongst most individuals make in their lives. Lawyer's fees are generally around 1% + IVA of the purchase price of the property. As a rule with larger value properties the fee can be negotiated. Your lawyer can also advise you if it is efficient to make the purchase as an individual or through a company.
It is possible to issue your lawyer or another person of confidence with a “Power of Attorney” so you do not have to be present at the signing of the deed. This Power of Attorney can be made abroad through the Spanish consulate, but be aware that this is very costly and time consuming. We suggest you sign the power of attorney whilst you are in Spain, in front of a notary. (You’ll find this takes just a few minutes.)
Once we have been successful in assisting you in finding your new home in Mallorca, an offer is made and the terms negotiated by us and a price agreed. One hugely positive aspect of buying in Spain is there is little margin for being ‘gazumped’ or out-bid since the property will normally then be secured through a private contract (an Option Contract / Opcion de Compra) between the two parties which will specify the price, date of completion and an inventory if sold with furniture. It is customary that 10% of the purchase price is paid on signing of the option contract, within 7 business days of signing. The Option Contract secures both the seller and the buyer, as the seller will now be prevented from selling to others without compensating the contracted buyer (normally twice the deposit price, which includes the deposit paid). Similarly, the buyer will forfeit his deposit in the event of his non-completion of the purchase. This Option Contract is best compiled by the lawyers of the two parties, whereby your agent will assist in the negotiation. Once the agreement is signed you normally have between 1 and 2 months until the completion date, where you would pay the balance of the agreed price.
Apart from individual ownership, a property may be owned by more than one individual or a company. The ‘owning’ company can be:
Your lawyer can then advise if best to purchase in your own name/names, or in a Company, dependent upon the property and your circumstances and based on current legislation.
Due to the current Wealth Taxes it may be more beneficial to purchase the property with a Mortgage. MJC Associates can recommend several Mortgage Brokers to get the best quotation.
When purchasing a property in Spain it is best to open a local Spanish bank account from where you can pay all future services and supplies to the house. A mortgage could also be considered to off-set taxes. Should you require a mortgage we can help advise on the best mortgage available through a recommended mortgage broker who often obtain better rates than going direct to the bank. It obviously makes sense to utilise the preferred mortgage provider as your main bank account. A bank will offer anywhere between 50-70% of the official bank valuation, dependent upon age and circumstances.
The time scale for the completion of the sale can be anything from 3 weeks upwards dependent upon both the vendor and purchaser’s circumstances. On completion of the transaction a deed of conveyance "Escritura de Compraventa" must be signed by both parties under notarial supervision in Spain.
A Spanish notary always has to be appointed for any property or other legal transaction taking place. The notary’s fees are usually paid by the buyer - unless agreed otherwise - and are fixed by law on the basis of a scale. Once you sign and the balance paid, usually in the form of a bankers cheque, you or your representative will be handed the keys.
After that the title deed is sent to the local land registry to register you as the new owner. This will generally be done by your lawyer or the Notary, which will take a couple of months.
A change of ownership of all supplies such as electricity, water, telephone and television also needs to be done – again the lawyer will generally perform this for you.
Congratulations – you will now be the owner of a new Mallorca home!
As a guide, it is suggested that you add between 11-13% to the agreed purchase price, which will cover most of the expenses involved in the purchase – see Part 2 Purchase Tax
+ .8% Notary fees
+ 1% lawyers fees.
If a mortgage is required, there will be additional opening fees etc. from the bank.
Our fees for a personalised, professional and bespoke Property Finder service are included in the price of the property negotiated, and will be the same as if you were buying through any other agent. Only we take away all the hassle, save you time, and since we are unbiased, often save you money ensuring you are buying the right property at the right price.
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.
MJC Associates would like to ensure this entire purchase process is as hassle free and as smooth as it can be, looking to start your life with a new home in a foreign country. We will be delighted to assist you every step of the way, from start to completion and beyond, we’re in it for the long term. We will ensure you obtain a competitive quote for:
We will also provide recommendations for international schools, interior designers and builders we have worked with over the last 15 years. All of which are tried and tested and very reliable and trustworthy. In addition, if you require a cleaner, nanny or anything else, just ask.
It is not necessary for EU citizens or citizens coming from the Swiss confederation to have a Spanish residence permit. For non-EU citizens, if you want to reside permanently in Spain, you would need to obtain a special visa at the Spanish consulate in your country of origin, which then allows you to apply for a residence permit.
Read more about the Golden Visa
Read more about the Beckham Law
On new residential buildings there is VAT (IVA) charged at 10% of the value.
On re-sales up to €400.000 which runs up a sliding scale to 11% as follows:
However, when it comes to urban plots, properties under construction, those that need to be completely refurbished or demolished, commercial premises and some garages (not annexed to a home) bought from developing or trading companies, VAT is 21%.
I.B.I is a real estate tax levied by the local town hall and is usually 0.85% of the cadastral value (valor catastral) of the property. This tax is normally paid in summer or autumn of the year in question, i.e. for 2022 the town hall will request it to be paid between July – October 2022, dependent upon the Council.
This is a tax paid for any income the property has had over the past year, generally from renting out. It covers the period starting from Jan. 1st to Dec. 31st. of each year, and is payable during the following year. The income tax rate is 19% on the profit for tax residents of the EU, Switzerland and Iceland, declared quarterly. 24% for all others. Some expenses can be deducted (for 19%). This base, which is the estimated income, is obtained by multiplying the cadastral value of the property by, in most cases, 1% and sometimes higher at 2%.
The non-resident owner of a property in Mallorca / Spain will be taxed yearly on the value of the real estate on account of wealth tax. The base is taxed according to a sliding scale for properties with a net value over €700.000 per person (between 0.20% to 2.5%). The taxable base will be the highest of the following values:
When the owner of the property is a non-resident company, a special tax has to be paid yearly. From 2013 the rate applicable has been set at 3% of the cadastral value of the property for companies based in tax haven countries or countries that haven’t signed an agreement, to avoid double taxation.
For owners there are significant benefits to be obtained regarding inheritance tax. We recommend you speak with your lawyer who will advise on the updated taxes of the time and what can be off-set.
A non-resident seller is subject to a 3% tax withholding on account of any possible capital gains tax. If the seller's liability is less than 3%, the seller can claim it from the tax office. Capital gains tax of the profit of the sale was reduced from 35% to 19% in January 2016.