Advice on buying Balearic Islands Real Estate Mallorca Property

You have found an Balearic Islands property you wish to purchase what next?

Buying Property in Balearic Islands - Costs of Purchasing Balearic Islands Property

Balearic Islands Property Buyer's Guide explains the legal fees, legal procedures, purchase taxes and mortgage procedure.

1. Choose the right Balearic Islands property for your budget and requirements

2. The two mandatory contract Stages

a) Reservation deposit:

The reservation deposit secures the Balearic Islands property, and the property is taken off the market for 2-3 weeks. The deposit is usually between 2000€ - 5000€ depending on the type of property being purchased. This period is essential and allows your lawyer to do the necessary searches, to make sure the property is safe to buy. The reservation deposit is refundable if the property turns out to be unsuitable or your finances alter before the purchase.

b) Option to buy contract:

When you have the sale go-ahead from the lawyer, an ‘option to buy’ contract is prepared and agreed upon. The contract states the purchase price and the completion date, agreed by both parties. When the contract is signed, 10% of the purchase price is paid to vendor. The reservation deposit already paid makes up part of this amount.

Be aware that if the buyer breaks the terms of the contract, the vendor is entitled to keep the 10%. If the vendor breaks the terms of the contract then the vendor must repay the buyer double the 10% deposit. This is a good way of ensuring that time is not wasted and that all parties are serious about the transaction. In practice, very few sales fall through after this point.

3. Costs and taxes

The costs of purchasing a property in Balearic Islands are around 10% of the purchase price and consist of the following:

Notary fees: Approximately 1 % of the purchase price

Lawyer’s fees: Approximately 1% of the purchase price

Property transfer tax or VAT

a) When purchasing a resale property, a transfer tax is payable, of approximately 7% of the value stated on the Title Deeds

b) VAT is also applied to new properties at a similar rate of 7%

Plus Valia tax: This is a small fee payable to the Town Hall

This fee increases, the greater the property value

Title Deed Value: this is 0.5% of the Title Deed Value

Stamp Duty: this is 1% of the purchase price

All of this requires a Fiscal Identification number (NIE). Recent legal changes require you to have this number before you can purchase a property. This can be obtained with the solicitor and notary.

4. Completion

The new title deeds for the property will be signed in the presence of a notary. The buyers must also be there in person, unless a power of attorney is legally given to your lawyer/legal representative, who can then sign on your behalf. Once the vendor is paid, the new title deeds are signed and the new owner is given the keys, and at this point the new owner has full title and is the proud owner of a new property!

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These guidelines are meant for guidance only and describe a straightforward purchase scenario. However this information is not meant to replace proper legal advice, which we always insist you take.

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