Buying Guide


These frequently asked questions will cover the basics of what buying a property in Mallorca entails. This is intended as an introduction to investing on this beautiful island; we look forward to meeting you in person to tailor our services to your needs.

1. The buying proccess

When buying a property in Mallorca, it is important to have good legal representation to assist with the buying process. Particular attention should be paid to the history of the property, especially its financial status regarding pre-existing debts, and ensuring the person selling the property is the legal owner.

Moving forward, your lawyer will draw up an option contract defining the agreed buying price (including a deposit which is usually 10%), the dates of payments, when the actual purchase will be finalised and what exactly your money will get you (furniture, fittings for example). Properties can be sold through numerous agents, an option contract such as this reserves the property once the price has been agreed. This allows you to complete any outstanding financial and legal matters. If the buyer pulls out from the sale after signing the option contract, the buyer will lose any deposit paid. However, if the seller changes their mind, they may have to pay twice the deposit amount depending on the wording of the contract.

The next stage is preparing and signing the Escritura de Compraventa (public title deed), to be drafted by the lawyer and signed by both parties and their legal representation in the presence of a Spanish notary. At this point, the remaining payment is due. On completion, the notary will send details of the Escritura de Compraventa to the local land registry to inform it of the new owner’s identity. In approximately three months, the official Escritura de Compraventa will be returned to the buyer once it has been checked and registered.

2. Fees and taxes

Between 10 - 13% of the purchase price should be allowed for any fees and taxes. Which, upon purchasing, can be categorised as follows:

I. Transaction Tax / Valued Added Tax VAT / IVA
  1.  An 8 - 10% transaction tax is applied to the sale of residential property in Mallorca. The tax is calculated according to the value of the property (8% applies to the first 400,00, 9% thereafter 400,00 and 600,000 and finally 10% for any remaining value above 600,000). That means a property costing 850.000€ would be taxed 8% for the first part up to 400.000€, 9% for the 200.000€ and 10% for the 250.000€ part over 600.000€.
  2.  Newly built properties are taxed (IVA - Value Added Tax) at 10%.
  3. Buying land in Spain, commercial premises or parking spaces in garages results in an increase to 21%IVA
II. Plusvalia
  1. This tax in general is dependent on the increase of value of the land between the moment of its purchase and its sale, and it is payable to the local town hall. This is based on a few key variables. a) the particular area where the property is located; b) the surface area of the plot; c) the cadastral value; d) and on the date of the previous title deed. The responsibility to pay this tax, by law, is on the seller however some sellers still ask to be paid by the buyer.
III. Notary Fees
  1. These are set according to a fixed scaled depending on the official value of the property. The notary will send details of the title deed (Escritura) to the local land registry to inform it of the identity of the new owner. It is a legally required step in the process and around 1% should be allowed for notary and property registry fees.
IV. Lawyer’s Fees
  1. Allow around 1% of the purchase value of the property to be allocated to lawyer’s fees.

V. Mortgage
  1. If the buyer needs a mortgage, loan starting fees may apply according to the bank.
3. Annual taxation

Property ownership in Spain brings annual taxes. We recommend you have a tax adviser, known as gestoría to handle annual tax payments, ensuring deadlines are met. Through our working relationship, we can help to advise on tax advisors who are well placed to assist. The main annual tax is IBI (land tax). The tax base is the catastral value of the property and the rate varies from 0.4% to 1.1% depending upon the region you’re investing in. The amount varies, but it ranges from 200 Euros to 2000 Euros per year depending on the value of the property.

4. Lawyers

Lawyers are not a legal requirement, however having professional, local and expert legal advice is strongly adviced as it will ensure the process of investing is a smooth one. It also ensures that you are well protected and well informed on what exactly you are buying, and if there are any major works planned in your soon-to-be new community that could affect you. Your lawyer will ultimately be the first port of call for all legalities related to your purchase: from a national Spanish identity number (NIE - that is obligatory to have during a property purchase) to handling the payment of the customary 10% deposit and accompany you to the notary for the final exchange of contracts. Your lawyer will inform you about taxes due on your property both during and after the purchase. Your lawyer will ensure that the property is legally yours and you can move forward without any unwanted debts. Strong legal representation allows for peace of mind in what is a complex process. The costs of a lawyer is usually around 1% of the purchase price.

We can help to advise on reliable legal representation with a proven track record of good client feedback.

5. Buying & financing a property - cost breakdown

One should add an additional 10-13% of the purchase price for extra fees of buying a property in Spain. This estimation will include: lawyer’s charges, the notary fees and and the transaction or value added taxes. Mallorca is very well suited for handling external finance and Spanish banks are generally uncomplicated and fast moving regarding mortgages for foreign customers.

As with all the topics addressed in this section, a personal touch is always best considering the personal and financial investment into moving to this island. As such, we recommend that you contact us with any questions you may have and we can answer on a personal basis and find the best solution for the next chapter in your life, on this beautiful Mediterranean island.

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