FincaCasa-Mallorca.com
     Immobilien Agentur  •  Real Estate Agency  •  Inmobiliaria
 
 
 
BUYING a property in Majorca ?
     
  1. Basics  
     
  As the close of each property acquisition, the transfer of ownership in the Land Register should be done. This requires a written contract of sale, which must be certified by a notary.  
     
  But before, it may be that other contracts come into play.  
     
  Reservation contract  
     
  If the buyer has only heightened interest in buying, the reservation contract comes into consideration. With this, the seller agrees to keep for the prospective buyer with a small reservation fee the property for a few days off. Decides the interested party within the time limit to purchase the property, the reservation fee is generally credited against the option fee or purchase price. If he decides not to make a purchase, the reservation fee is usually lost.  
     
  Option contract  
     
  A much more intensive binding causes the option contract. In this, the seller grants the purchaser (buyer), usually against a payment of an option fee, the right to purchase the property within a option period at a given price. The seller cannot sell to a third party within that period. In general, the option fee is 10% of the purchase price which will be credited in case of purchase, against the the purchase price. If the buyer decides not to make the purchase, the option fee is usually lost. In case that the seller decides not to fulfill the option contract, which means that he don't want to sell the property to the buyer, because he has, for example, a higher price offer of a third party, it's usually agreed that the seller has to pay back the option fee to the buyer and the same amount on top as compensation.  
     
  Private written purchase contract  
     
  With the completion of a private written purchase contract the property is sold legally. This agreement often comes then to apply if the parties want to finalize the purchase immediately.  
     
  Notarial purchase contract (ESCRITURA DE COMPRAVENTA)  
     
  The notarial purchase contract, commonly called "escritura " is, as mentioned, required that the new owner can be registered in the land register. In addition to the personal data of the parties, the notary deed essentially contains the detailed description of the property, the purchase price and the payment terms.  
     
  Spanish Land Register  
     
  Concurrently with the notification of the sale by the notary the civil servant of the Land Register enter a flag in the register of the property to block for the next 10 days the register of the property for other entries. Within these 10 days the notarial contract should be signed. If this happens, the land register will be blocked for another 60 days. In this period the  transfer tax has to be paid to be able to incorporate the new owner in the land register.  
     
     
  2. Taxes when buying  
     
  Unique taxes  
     
  When buying a property, the buyer either has to pay value added tax (VAT), or real estate transfer tax (ITP).  
     
  Value added tax - VAT (IVA)  
     
  VAT is only aplicable in professional sales of an entrepreneur.
· Bulding plots and commercial real estates will be taxed with 21% VAT
· S
ales of newly built
condominiums and single- or morefamily houses will be taxed only with 10% VAT.
For all
transactions which are subject to VAT, in addition 1.2% stamp duty will arise. All other transfers
which are not subject to VAT, will be taxed with a
real estate transfer tax (ITP).
 
     
  Real estate transfer tax (ITP)  
     
  For all sales that are not subject to VAT, the real estate transfer tax (ITP) applies. The real estate transfer tax is a regional tax, which is different from high in the autonomous regions. Currently, calculated on the Balearic Islands, the land transfer tax is as follows:  
  · The first € 400,000 of the purchase price will be taxed at 8%,  
  · the amount between      400,000.01 and    600,000 the transfer tax is 9%,  
  · the amount between     600,000.01 and 1.000,000 the transfer tax is 10%,  
  · and the balance from 1.000,000.01 is taxed at a tax rate of 11%  
     
     
  Current taxes  
     
  As current taxes there are the ground tax and the income tax for the buyer  
     
  Ground tax  
     
  The property tax (Impuesto sobre Bienes Inmuebles, IBI) is levied on the value of rural and urban land based on the cadastral value of the municipality and is payable annually. The amount of property tax varies from community to community and is usually between 0.4% and 1.1% of the cadastral value for urban land and between 0.3% and 0.9% for undeveloped land.  
     
  Income tax  
     
  Non-residents who use a property in Spain even have to pay tax on these self-use value as income. The tax is calculated as follows: 1.1% of the cadastral value, to 24.75% taxes are to be paid.  
     
  Wealth tax  
  The tax rate is between 0.2% and 2.5% for all goods located in Spain. There is an allowance of € 700,000.  
     
 
FincaCasa-Mallorca
Plaza Santa Ponsa 1 â€¢ E - 07 180  Santa Ponsa â€¢ Tel: 0034.971.251767

C/ Platges, 3b  •  E - 07196  Es Capdella / Mallorca  •  Tel: +34.971699306
Properties in Majorca SouthWest
Specialist for Bank Reposession / Bank Recovery Properties