The purchase costs associated with buying a property in Mallorca vary according: a) to the price of the property; b) whether it is new or a resale. The notes below detail the costs you should allow for and should help you determine your budget. When it comes to making an offer, we’d advise going through the costs in advance with your lawyer.
The taxes that will be applied to your property purchase differ according to whether it is a new property or a resale. “New” is defined as a property bought from the original developer.
New properties – I.V.A.
If you are buying a new property, it will attract “Impuesto sobre el valor añadido” or IVA, the Spanish equivalent of VAT. This is currently set at 10% of the purchase price.
New properties also require payment of AJD (Stamp Duty), a document tax or stamp duty, currently 1.2% of the purchase price.
Resale properties – ITP
If you are buying a resale properties, it will attract Impuesto sobre transmisiones patrimoniales (ITP). This tax is set in three bands:
- Payable on purchase price up to 400.000 Euros – 8%
- Amount payable from 400.001 to 600.000 – 9%
- Amount payable from 600.001 upward – 10%
Tax is levied at the applicable rate in each band. E.g. for the purchase of a house for 525.000 Euros.
- 8% on 400.000 Euros = 32.000 Euros
- 9% on 125.000 Euros = 11.250,00 Euros.
TOTAL: 32.000,00 + 11.250,00 = 43.250,00 Euros
Your legal costs should be covered within the overall allowance outlined above unless it is an unusually complex conveyance.
- Notary fees. These vary depending on the value of the property.
- Land Registry fees. These are basically administrative fees and are not significant. They vary according to the locality, type and value of the property.
- Lawyers fees.Lawyers in Mallorca generally charge in the region of 1% of the purchase cost.
Mortgage arrangement costs
In most instances mortgage costs are now required to be covered by the bank. This includes AJD (stamp duty) and administrative costs.
You should however allow for the cost of providing a valuation of the property. Also, if you are using a mortgage specialist or broker of any sort, they may charge you a fee and this also will be your responsibility. If you are using a specialist or broker, make sure the costs are clear in advance of appointing them and don’t be afraid to negotiate.
Key steps in the
Surveyors and architects