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Requirements for first time buying in Mallorca
There are a few important details that need to be handled before you buy a property in Mallorca. If you are buying for the first time on the island, you may be surprised by how different the process is compared to in your home country. The first and most important factor is to find a good well-known Lawyer to lead you through the steps and it is also crucial from the beginning for them to make sure that the property is actually owned by the owner and that is has no debts against it.
Offer is made:
Once a formal offer has been made and accepted, a 10 % deposit is required along with an “Option Contract”, which can be non-refundable, depending on the contract, this is if the buyer pulls out. If the seller pulls out, then the seller usually has to refund the deposit plus another 10% of the selling price (also depending on the contract). This rule exists to help avoid sellers changing their mind to accept higher bids.
The lawyer will help you through this process step by step.
If you are not buying your property outright and need to speak to a Spanish bank for a mortgage, your Lawyer can help you find a reputable bank and will take care of the process.
There are certain documents that the seller must present when selling the property, these are: Property Registered Document from the Land Registry, sales contract, Cadastral document, property tax documentation, energy certificate, habilitation certificate, certificate proving there are no construction infringements and confirmation of payment from any last bills (water, electricity etc.)
If you are from abroad, you will need to get a tax NIE number (Foreigner identification number), which will require your identification documents.
Tax charges & Costs:
You need to make sure that you have around 10% addition to the value of the property for purchase tax.
Purchasing from a private individual
• Property Transfer Tax (ITP) – paid by purchaser
• Municipal appreciation tax – paid by seller
• Property tax (I.B.I.)
• Wealth tax – anual
• Income tax
Initial additional costs that will incur when buying a property on the island:
• Estate agent costs
• Notary costs
• Costs for registering the Deed of Sale in the Land Register
• If applying for a mortgage: Notary and Land Register costs incurred for the creation and registration.
• Solicitor’s fees
• Legalization costs
On the completion day, all parties must be present at the notary, including any financial persons or banks that have offered mortgages.