Guide

Brokerage fee

As a rule, the commission in Mallorca is paid by the seller, unless the parties have expressly agreed otherwise. The broker’s commission in Mallorca is between 5 % and 6 % of the agreed purchase price plus VAT (IVA).

Incidental purchase costs (lawyer etc.)

The incidental purchase costs incurred for the purchase of a property are generally made up as follows: The land transfer tax varies depending on the type of property and amounts to a rate of between 8% and 13%. In addition, there are lawyer fees of around 1% of the purchase price and notary fees of 1.5% of the purchase price.

ETV license / holiday rental license

A so-called “ETV license” is required for letting for tourist purposes. It should be noted that there are older licenses that do not have to be renewed regularly. Due to the low number of new licenses granted, properties with an existing ETV license experience an increase in value.

It is still not easy to get a license and you need a lot of patience as there are many special regulations and the number of licenses is limited. The property must be located in an area in which a license is possible according to the development plan. A corresponding license must be applied for from the municipality in which the property is located. Letting is only permitted with the issued registration number.

NIE number – where and how can I apply for one?

The NIE number (Número de Identidad de Extranjero) is essential when buying property. It is a Spanish foreigner’s identity number and also the tax number. Foreigners need this in any case in order to conclude contracts and carry out any type of public act.

You can apply for the NIE number either at a police station (Dirección General de la Policía y de la Guardia Civil) or via a Spanish consulate or through an intermediary, possibly your lawyer.We can also give you recommendations here.

Mortgage in Spain

It is generally possible for foreigners to obtain a mortgage to buy property in Spain. Many Spanish banks offer mortgages for foreigners, but the conditions and requirements can vary depending on the bank and individual financial situation. It is advisable to contact various banks at an early stage and clarify the exact conditions, interest rates and requirements. As a rule, a NIE (Número de Identificación de Extranjero), the aforementioned foreigner identification number, is required to apply for a mortgage. In addition to a solid credit rating and a regular income, other factors such as the amount of equity can also play a role. As a rule, Spanish banks use a variable interest rate based on Euribor. This corresponds to the average interest rate based on data from over 20 European banks, to which the bank’s margin is then added.
Please note that you need at least 30% equity capital.

We cooperate with a company that specializes in the processing of mortgage loans and other financial products in Spain. You can obtain the best banking conditions through this service provider.

Further recommendations for your property

As a well-connected property company in Mallorca, we can recommend tradespeople who can help you with various services related to your property. Whether you need an electrician, plumber, pool service, remodeling of all kinds or other issues, we have contacts with reliable and qualified craftsmen who will be happy to help you.

The first clarification for tax issues regarding a property in Mallorca concerns the distinction between whether you are acting as a legal entity, for example in the name of a company, or as a natural person. Another decisive factor is whether you are registered as a resident in Spain or not. We work closely with highly qualified and competent lawyers and tax advisors who speak your language. This team is at your disposal to provide you with comprehensive information on Spanish property law and to explain in detail the costs and taxes you may incur when buying a property in Mallorca.

One-off taxes to be paid:

Real estate transfer tax

Since 01.01.2023, new regulations for property transfer tax apply in Mallorca:

• The first €400,000 of the property purchase price is subject to a property transfer tax of 8%.
• For the amount from €400,001 to €600,000 of the purchase price, a property transfer tax of 9% is levied.
• In the range from €600,001 to €1,000,000 of the purchase price, the real estate transfer tax is 10%.
• Between €1,000,001 and €2,000,000 of the purchase price, a real estate transfer tax of 12% is due.
• If the purchase price exceeds €2,000,001, the property is subject to a real estate transfer tax of 13%.

Value added tax

Land transfer tax is payable on the purchase of a second-hand property, while value added tax (IVA) is payable on the purchase of a property for first-time occupation. The applicable tax rate depends on the type of property. For residential properties including garage parking spaces (maximum 2 per residential unit), the IVA rate is 10% of the purchase price. For the purchase of land from a commercial enterprise and the purchase of commercial property, the tax rate is 21%.

Current taxes payable annually:

Property tax (IBI)

The property tax liability extends to the owner, the leaseholder and the usufructuary of the property. The municipalities determine the amount of property tax, which varies between 0.4% and 1.1% for developed properties and between 0.3% and 0.9% for undeveloped properties.

Wealth tax

Wealth tax in Mallorca is a tax levied on a person’s total wealth. The exact regulations may vary depending on the autonomous communities, as this tax is determined at state and regional level.

Both residents and non-residents must pay wealth tax in Spain. The amount of tax depends on the assets held in Spain. These include property, cash, bank deposits, securities and other investments.

It is important to know that there are allowances that are set differently by the Autonomous Communities. The tax-free amount is €3,000,000. For example, if a property has two owners (a married couple with 50% each), each owner is entitled to the allowance. Residents often have higher allowances than non-residents. Wealth tax is usually due once a year and must be declared in the income tax return.

To ensure that all relevant assets are correctly recorded and the necessary payments are made on time, it is advisable to consult an experienced tax advisor.

Income tax (IRPF)

In Spain, there are both regional and national income taxes that must be paid by individuals and companies. Specific income tax rates apply to residents in Mallorca and are based on different income levels, taking into account income from labor, capital gains, real estate and self-employment. There are also various deductions and allowances that can be claimed individually.

Different tax rates and regulations generally apply to non-residents who earn income from Spain. The exact taxation depends on the type of income, for example from rentals or capital gains. It is important to submit an annual income tax return in Spain, correctly declaring all income and making use of the available deductions and benefits. Professional advice from a tax advisor is recommended to ensure that all tax obligations are met and possible benefits are utilized.

If the seller of the property is a company, corporation tax of 30% must be paid on the profit realized in addition to trade tax.

However, if the owner is a natural person, the profit realized from the sale of the property is subject to income tax. Different tax rates apply for residents and non-residents. The profit is calculated as the difference between the original purchase price and the current sale price.

The process of selling a property for an owner:

• We start with a personal initial consultation and thorough analysis to determine the optimum selling price for your property. To do this, our team collects all relevant information such as the location, size, features and condition of the property.
• The property survey is an important step in the marketing process (see our services): Our experienced team will record your property and prepare it for marketing.
• Based on this information, we create a customized marketing plan for your property. This plan includes various marketing channels and strategies to appeal to potential buyers. This includes creating appealing exposés, marketing on our website and other online platforms, using social media channels, organizing viewings and targeted advertising measures. We develop a customized marketing strategy to present your property in a targeted and effective way.
• We attach great importance to transparent marketing. That’s why we provide you with a personal contact person throughout the marketing process. This person will involve you in all activities, including regular updates on sales status, providing viewing reports, coordinating planned marketing initiatives and informing you of contract-related details.
• As a professional estate agent, we know the potential of your property and aim to sell it as quickly as possible at the best possible price. We support you in quickly brokering purchase offers, conduct price negotiations to achieve the best conditions for both parties and ensure that the contract is processed correctly.
• Once the price has been successfully agreed, all relevant documents are immediately forwarded to a lawyer. If necessary, an architect can also be called in to check the legal and structural aspects of the property. This ensures a comprehensive and thorough review to ensure that all legal and structural aspects are taken into account.
• An option contract is drawn up to define the terms and obligations of both parties, including the down payment of 10% of the purchase price made by the buyer.
• Assistance with the conclusion of the notarised purchase contract. The formal transfer takes place in front of a notary, who ensures the legal aspects.
• Handover of the property by the estate agent After sales service: We remain at your disposal even after the sale.

What documents are required for the sale?

If you want to sell a property in Mallorca, there are some important aspects that you need to consider in order to complete the process successfully. These include:

• Current extract from the land register (Nota Simple) or deed of sale (Escritura)
• Copy of identity card – for non-Spanish nationals the NIE (Foreigner Identification Number).
• Energy certificate
• Certificate of habitability
• IBI (annual municipal tax)
• Basura (rubbish tax)
• Floor plan

NEW Energy certificate (certificado de eficiencia energética)

Since 1 June 2023, all properties in Mallorca that are sold or rented out must have an energy performance certificate. This certificate, valid for 10 years after issue, provides information on the energy requirements of the property and should also contain recommendations for improving energy efficiency.
If the energy certificate is missing when renting or selling your Mallorca property, severe fines of up to 3,000 euros can be imposed.
In order to obtain the energy certificate, the owner/landlord must have their house or flat inspected by a technician (architect or engineer) authorized to draw up the energy certificate: Insulation, ventilation, orientation/location, ventilation system, presence of a solar system, sun protection, heating system, air conditioning and lighting.
The cost of an energy performance certificate in Mallorca can vary depending on the size and complexity of the house. As a rule, the cost of an energy performance certificate for a house in Spain is between 150 and 400 euros.

Recording your property / our service to you

• Personal property inspection on site
• Determination of the current market price
• Professional property photos
• Drone recording by a videographer
• “Matterport” 3D premium tour
• Property video/reel
• High-quality exposé with detailed property description in several languages
• Review of all documents required for the sale
  Professional marketing of your property on our website and on international portals (in red from January)
• Social media marketing (Facebook, Instagram, Linkedin)
• Attachment of a sales sign to your property

Need a property valuation?

Do you already have a fixed price that you would like to put on the market or do you need us to estimate the value of your property?

Contact us!

The property purchase process:

• Preparing and defining the search criteria:
  Before you start buying a property, think carefully about the type of property you are looking for and which criteria are really important to you or seem merely desirable (nice to have).
• Contact us and submit your search criteria:
  Get in touch with us and let us know your search criteria. If there are any uncertainties, let us know and we will be happy to advise you.
• Selection and organization of viewing appointments:
  Based on your search criteria, we will select suitable property offers for you. We organize viewing appointments for interesting properties and provide you with comprehensive advice on each individual property.
• Organization of the required documents:
  Certain documents are required to buy property in Mallorca, such as the NIE number and a Spanish bank account. We will be happy to help you organize these documents.
• Price offer and negotiations:
  Once you have found your dream property, make a price offer. For some properties, there may be no room for maneuver on the price. We will negotiate with the owners to reach a price agreement.
• Transmission of the documents to the lawyer:
  Once an agreement has been reached, the required documents will be sent to your solicitor. If required, we can also recommend a lawyer in your language in Mallorca.
• Option contract and deposit:
  The lawyers draw up the option contract and the buyer pays a deposit of 10% of the purchase price.
• Organization until the notary appointment:
  In the meantime until the notary appointment, there are still some organizational and clarifying steps. We will support you and assist you every step of the way.
• Notary appointment and completion:
  At the notary appointment, the remaining 90% of the purchase price is paid and the purchase process is finalized. We will continue to accompany you and provide you with support.

Documents required for the sale:

• Copy of identity card
• NIE (foreigner identification number)
• Spanish bank details
• Proof of creditworthiness, if applicable
• for bank financing (see above)

What are you looking for?
Get in touch with us!