How do I buy a house in Mallorca? Would you like to make Mallorca your second home and are thinking of buying a property in Mallorca? In this blog post we explain what to expect, what to look out for and how to proceed if you want to buy a house in Mallorca:

Extract from the land register

The most important document is the extract from the land register because you ultimately buy what is in the land register. To do this, contact the land registry office responsible for you. Before signing the contract, you should have a current excerpt and the following should be checked:

– Who are the owners and what are the circumstances

– The property corresponds to what is entered in the land register. Here you can read how many square meters the plot and registered house are and who your neighbors are.

– The property is free of debt and encumbrances, so there is no mortgage or taxes to be paid. If so, that should be resolved prior to sale.

– No tenancies are registered

– Registered right of way (servidumbre de paso)

If you have bought the property, you must register as the owner in the land register as soon as possible after signing the deed of sale. The transfer takes on average one to two months. Normally, the notary sends a copy of the deed directly to the land registry office responsible for you. In the meantime a notice will be made that this property has been sold so that it cannot be sold again.

Cadastre

The cadastre, which gives you additional information about the property, is also important to you. Here, too, it should be noted that the information on property boundaries and square meter numbers are not clear here either and are often not up-to-date or complete. It would be important for the notary to provide the correct information so that the data can be updated in the land register office. Based on the information in the cadastre, your property will be taxed by the Spanish tax authorities. This is the so-calld IBI (Impuesto de bienes inmuebles = municipal tax).

Checking the legality of the property

What you buy must also be approved or at least registered in the land register. This brings us to the structural situation of the property. It must be checked whether all permits are available for the current state, i.e. for the state in which the property is at the time of purchase. This is particularly important when buying new homes or when buying direct from the developer.

You can get the information from the responsible town hall. You have to be particularly careful if you are interested in a property that is located in rural areas (suelo rústico). In the case of properties that are used for residential purposes, the relevant licenses must be checked by the town hall and the island council (Consell insular), so that there are no nasty surprises later.

New construction project and real estate

A lot is still being built on Mallorca, including by property developers. So maybe you are interested in a home on the island that is unfinished or needs construction and you would like to buy direct from the developer. In this case, you should make sure that the developer provides you with the legally required liability insurance („seguro decenal“), which is liable for defects in the construction for up to ten years after the building inspection. You must receive these insurance documents in addition to the other documents.

The developer is also required to provide insurance for your down payments, which you will make as construction progresses. This insurance must be issued explicitly for your property only and may not affect the entire complex. If, depending on the progress of construction, you transfer further down payments, there must be a separate account for this.

It must be ensured that any monies you pay go only towards building your own unit. The building acceptance must then be signed by the responsible architect. Before the sale takes place, the new building declaration should be made at the notary and then the entry in the land register is made.

Spanish Coastal Law

Living by the sea is every homeowner’s dream. If you want to buy a property directly on the coast, then it must be ruled out that your dream home is affected by the Spanish Coastal Law, which was passed in 1988. A so-calld public coastal area is anchored in the law, which keeps a distance of 10 meters from the sea. Your house should not be there.

Owners‘ Associations

Are you interested in a smallr property such as a condominium? This is a special case and there are certain legal provisions for it. It is important for you to look at the „laws“ of the community of owners, the statutes, before you buy. This includes, for example, how you are to behave in the complex (times for using the pool, renting to third parties, rules of conduct in the gardens, etc.)

Real estate acquisition and taxes

Before it goes to the notarization, the so-calld purchase option contract is usually concluded, which you should have drawn up by a lawyer. It is a contract under private law, with which a down payment of 10 percent of the purchase price is due.

The seller and buyer then agree, usually within 2 to 3 months, when the notarial deed of sale will be signed. This then becomes the final payment for the property, which is then „handed over“ to you.

Taxes are due after the purchase of a property, and there are differences between a first-time occupancy and an existing property that has had one or more owners. In the case of a new build property, VAT (IVA: impuesto sobre el valor añadido) of 10 percent is paid to the seller at the same time as the purchase price. The “stamp tax” (impuestos sobre actos juridicos documentados) is also due. It is 1.2 percent and is to be paid by the buyer. It depends on the price of the property, which is in the deed of sale.

In the case of a second-hand property, a real estate transfer tax (ITP: Impuesto sobre transmisiones patrimoniales) is payable, which is currently progressively between 8 and 11 percent.

8% up to €400,000

9% between €400,000.01 and €600,000

10% between €600,000.01 and €1,000,000

11% over €1,000,000

It is to be paid to the tax authorities within the first 30 days after the certification.

Lawyer

Let a lawyer specializing in real estate law support and advise you. The lawyer only protects your personal interests and is not interested in concluding a contract quickly, nor does he have to mediate between the two parties (buyer and seller). The lawyer’s job is to check all the necessary documents before you buy your new property and to eliminate any potential stumbling blocks.

Do you have any further questions if you want to buy a house in Mallorca? Then contact our real estate agency Casal Mallorquí in Manacor.

We’re here to help.