Buying Process
Is there any tax on Purchasing Majorca properties? Should I require hiring a notary? Do I require a resident permission? These topics and other relevant questions on purchasing Majorca properties are given below
MALLORCA-PROPERTY – BUYING PROCEDURE
There are several stages to complete the buying process. Once you have selected your desired property and agreed to the terms, you should then need to secure the property. The procedure can be accomplished by personal contracts between you and the seller of the property. It is traditional to pay 10 percent of total purchasing price at first. The seller and you should sign a legal document of delivery that is called “escritura pública” under the administration of notary personnel
Legal
Is there any mandatory rule to employ a notary? The answer is Yes and who will pay the official fees? Usually, the seller is responsible to pay the legal charges; otherwise, it will be fixed up by law and you need to employ a native lawyer who is fluent in buyer’s language. The lawyer will counsel the buyer and will take necessary steps to ensure that the buyer’s investment is completely secured. The fees of the lawyer are approximately 1% to 2% of purchasing cost of Mallorca property. Property Agent’s fees may differ on the basis of region or state and the superiority of property. In the Costa del Sol, it is traditional that the seller will pay the legal fees. The legal fees may be different regarding the value of purchased property..
Tax
Is any purchasing tax there on Mallorca Property? In case of purchasing residential buildings that are new, there is 7% VAT of the total price, 1% stamp charges and all these fees will compensate the buyer. However, on city plots and commercial grounds which are bought from trading or developing companies, the VAT is up to 16% of the value. There is 7% tax on re-selling any type of property. In all circumstances, there is an extra value tax called “plusvalia” (it is not the capital gain tax as people often think this to be capital gain tax that is to be paid by the vendor). Usually, “plusvalia” is urban property relevant tax and the seller is responsible to pay this tax. However, is an issue of negotiations among sellers and buyers.
Registration
Is there any mandatory registration rule for a new ownership? The right answer is Yes and it can be done by signing the “escritura publica” called ‘conveyance deed’ at the office of land register.
Ownership
Is there any different procedure of an ownership? Separate from the individual possession; one or many more companies may own a Mallorca property. Owning companies might be Spanish or from different countries with an agreement of double taxation with Spain.
Residence Permits
Is there any compulsory rule to obtain residence permits?
No, it is not mandatory to have a residence permit for the EEC resident or the citizens of Swiss confederacy. Those who are citizens of non-EEC and expect to dwell in Spain permanently would require attaining special visas from the Spanish-consulate regarding their origin countries which permits them to submit an application to obtain residence permits.
Selling a Mallorca property
In the event of any potential capital gains tax, a Mallorca property seller who is non-resident is liable to a 3% of tax retention. If the seller thinks that he should not pay up to 3% depending on the value of the property, he has the right to claim it submitting an application to tax office. The Capital gain tax can be counted up to 18 percent of the earning of total sales value. On the subject of 3% tax, there is a discharge. If a Mallorca property is under the possession of the seller for at least 10 years ago and he does not run multiple companies and he runs is a resident company, the seller is not subject to pay the 3% retention.
Professional advice:
The private conducts of the people and the laws change constantly round the globe. This issue of law and people is considered as a common incident. Therefore, we strongly suggest you to contact a financial advisor or a qualified lawyer. We would be ecstatic to suggest trustworthy professionals who are involved in realty property both for seller and buyer
YEARLY PROPERTY TAXES
This realty tax is usually counted up to 0.85 percent of the Valor Catastral(cadastral value) and it is preset by the local town-hall.
Property Income Tax
Property income tax is counted by the income tax office each year starting from January 1, to December 31 and it should be paid throughout the year and is applicable only for the urban properties. This rate of income is up to 25 percent and is functional on payable bases. The base is the projected income which is attained by multiplying 2% of the property’s cadastral value. This value is 1.1% in some of the events. When the cadastral value is updated after 1st January, 1994 and there was nothing about cadastral value of the property and the property owner had not been informed of the property value, in this event the value is 50 percent of purchasing price asserted in the deed of title that is to be adopted. Again, this value can also be claimed by the local tax office.
Property Capital Tax
Non-residents
In case of wealth tax in Spain; a non-resident property owner is subject to pay this tax according to the worth of his real estate property. It is fixed up to a light scale ranging from 0.2 percent – 2.5 percent. The base of the tax will count the highest amount for the values including cadastral value, the buying price stated on the conveyance deed and the value projected by the tax personnel.
Non-resident property company
If non-resident property companies own a Mallorca property, special taxes are applicable for the companies by the rule implemented in 1996 and payable rate is 3 percent of the property’s cadastral value. If the cadastral value is not applicable, the company should pay the tax of wealth by the provided law.
Other Expenses/ Taxes
Garbage compilation tax
Garbage collection tax is payable at the local tax office.
Community Fees
Community fees are payable to the owners of Community for the maintenance and services of municipal areas when a Mallorca property; situated in a condominium or development fields. All the information above is subject to change anytime and only described as a guideline for purchasing property in Mallorca. The accurateness of the above information is not 100% guaranteed.
