The Buying Process
The Mallorca Property – purchasing process
What are some of the stages that are involved in the whole completion process? Mallorca property is simply chosen on the b of terms that go agreed thereon. The property has to then secure. This can then be achieved through the kind of private contracts that are entered between any of the two agreed parties. It is also customary that close to 10% of the total purchasing price is paid there and then. On completion there is a deed known as “escritura pública” for conveyance and therefore has to be signed by either parties all under the notarial supervision.
Another of the queries comes as to whether it essential to appoint notaries or a notary in this case? The answer is yes. Who should pay for the legal fees that are incurred? In theory, the fees are simply incurred or rather paid by the purchaser, unless and otherwise it is agreed so by the parties involved. Remember this has to be fixed by law and also on the basis of a measure. This is advisable especially in the appointment of a local lawyer who helps speak the buyer’s language. He/she will therefore be able to carry out the title search. It is also advisable to the purchaser as regards all the aspects of the contract. The Lawyer’s fees are usually between 1 and 2% of the total buying price of the selected Mallorca property. The Estate Agents’ also have to get a share of the fees that vary depending on kind of estate or the region and also on the type of property. On Mallorca usually it is customary for the buyer to pay all the commission. Normally the commission paid is a percentage of the price (selling) though at a fixed fee. It may then be understood and agreed between the parties. This depends on the price of the selected Mallorca property.
Does a purchase tax exist? On a new residential property there exists VAT (IVA).It is charged at a rate of 7% of the total value. Additionally, there is a 1% tax for the tax stamp duty. All this is paid by the buyer. However the urban plots or commercial premises and some of the garages (those that are not annexed as a home) are bought from the developing or generally the trading companies at a VAT of 16%.The re-sales have a property type of transfer tax that is set at 7%. In most cases there exists a surplus tax value called “plusvalia” (this is not to be confused with the capital gains kind of tax that is payable by the purchaser. This is usually on the profit that is made as soon as the Mallorca property is sold). “Plusvalia” is should be incurred by sellers, and therefore is a tax by the municipal on the increase in the value on only the land property. However, this may be as a result of negotiation by the buyer and seller.
Taxes and Relevant Processes
is it essential to register any new form of ownership? Obviously the answer is a yes. This is possible by entering the document called the deed of conveyance or “escritura publica” at the office of the land registrar.
Are there any different kinds of ownership?
Else the individual kind of ownerships, a property may also be owned by a single or even more companies. Owning the companies can simply be Spanish or from any other country with double kind of taxation contracts with Spain or still from offshore or a combination of the two.
Is it very crucial to acquire a permit for residence?
No, you do not have to. It is not important for the EEC citizens or simply the other citizens who come from the confederation of Swiss. As regards the non-EEC citizens, they may want to live for life in Spain. This is possible as what is needed is just but a special visa acquired from the Spanish consulate. This is got from the place of origin that lets them to be able to apply the residence permits.
Selling the Mallorca property
As far as the non-resident sellers are concerned, they are subject 3% tax that withholds on account the possible capital gains nature of tax. Once the sellers’ liabilities go lower than 3%, then they can get it from the tax offices. The Capital gains tax is usually 18% of all the profit gotten from the sale. There are exceptions as far as the 3% retention is concerned. First, when the vendor has owned the property beginning the date 31st of Dec 1996 for 10 years and over and secondly if the vendor is not a resident company but an individual.
The Professional advice:
Both laws as well as personal circumstances are on a continuous change. All these answers and most questions are simply general but anyway it is strongly recommended and that you contact your professional lawyer or even a financial advisor.
The Annual Property Tax
I.B.I. “Impuesto Bienes Inmuebles”
This is the real estate kind tax that is levied by a local town hall. It is usually at 0.85% of the whole cadastral value also “valor catastral”
The Property Income Tax
this will cover the period that begins January 1st -Dec. 31st. of every year. It is payable only during the year that follows (urban properties). Its income rate is at 25% and it is applied to its taxable base. The base, usually the estimated amount of income, is then got simply by multiplying cadastral property value by 2%. In other cases the multiplier becomes 1.1%.this happens when value of cadastral is updated after 1st January 1994.Also this happens when the property lacks the cadastral value or even still if the property owner hasn’t been given notice of the value. In this case the value that becomes adopted becomes 50% of the buying price that is declared in the deed title, or which is assessed by the office concerned with tax, whichever that is higher.
The Property Wealth Tax
The non-resident owners of the property for Spain will have to be taxed depending on the value of their real estate. This is on account of the wealth tax. Its base is simply taxed only according to the scale of between 0.20% – 2.5%).