Sale of houses or apartments in Mallorca
According to Spanish law, the purchase of a property is legally binding even without a notarially certified deed. The change of ownership should be entered in the property register ( registro de la propiedad) or in the land register and the purchase contract must be notarised ( escritura pública de compraventa). All EU citizens are legally treated equally here.
Once the buyer has decided on his new property, he should clarify a number of questions, such as
Documents that are missing from the seller and that the seller must provide
- Financial audit
- Tests by the architect
- Inspections by the expert
- Examinations by the tax consultant
- Examinations by the lawyer
This may well take several weeks.
So that both parties can document their promise to buy or sell during this time, private contracts are concluded in advance: the reservation contract, the option contract and the private purchase contract.
With the reservation contract, the seller keeps the property free for a short period of time for a small reservation fee.
With the option contract, the seller and buyer are bound to the purchase contract for a longer period of time. As a rule, an option fee of 10% of the purchase price is agreed. If the buyer withdraws from the purchase, this option fee remains with the seller. If the seller sells the property to another buyer, the double option fee must be paid back to the buyer.
It is also possible to conclude a written private purchase contract, which must then be sealed by a notary contract for entry in the land register.
At the time of notarization, the notary draws a current extract from the current land register and the property is blocked for other buyers for 10 days.
The notarized purchase contract contains the personal data of the parties, the exact description of the property with the possible encumbrances, the purchase price and the payment terms. At the appointment, the notary verifies the identity of the parties and checks the property register to see if the information provided by the parties matches the data. The notary also makes sure that the last invoice for the local municipal tax (Impuesto Sobre Bienes Inmuebles - IBI) and, in the case of the sale of a property in a communal facility, the certificate from the president or administrator confirming the payment of the communal charges is available. On this day, all payments are usually made between the seller and the buyer, including the bank.
The notary must notify the Land Registry of the notarisation within 24 hours of signing the notarial deed.
Once the land transfer tax has been paid to the tax office, the transfer of ownership can be completed at the land registry.
The municipal increment value tax (Plusvalía) and the profit tax within the scope of the income tax are paid by the seller.
Municipal increment value tax (Plusvalía)
Plusvalía taxes the increase in value of the land (not the building) since the last transfer. The basis for calculating the tax is the cadastral value (valor catastral), which can be seen on the annual municipal tax document.
Profit tax/income tax/added value tax
When a property is sold, the resulting profit is subject to income tax. For foreigners (non-residents) the tax rate is 21% since 2012. Residents (foreigners who have their main residence in Spain) are taxed in three stages from 21% according to their income. If the seller is non-resident, the buyer must withhold 3% of the purchase price and pay it to the Spanish tax office. This is an advance payment of the seller's profit tax.
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