When buying a property on Mallorca or in Spain in general, there are some differences to the German system, from taxes on incidental costs at purchase, to contract design. Here we give you some information you need when buying a property in Spain.
As a result of the financial crisis, Spain's real estate market has become even more popular with German investors. In any case, Germans are also very keen to invest in Mallorca, and the drastic drop in prices in certain segments and the sometimes prevailing oversupply have recently increased the desire to buy. But it doesn't make sense to buy all over the island. We will show you briefly the price structure, which differences to German law you have to pay attention to and what the current tax situation is.
Who is allowed to buy real estate on Mallorca?
EU citizens have the same rights as all Spaniards in Spain and therefore also in Mallorca, which means that there are no restrictions on the purchase of real estate. So you can buy anywhere in Spain - the Spanish Constitution of course guarantees the protection of your property.
How is the taxation? Value added tax and real estate transfer tax on real estate purchases
IVA, Spanish value added tax, is levied on initial purchase (new construction, also by the developer) and on the purchase of building plots. There are different tax rates of between ten percent for apartments/houses and, for example, 21% for commercial real estate on the purchase price. If the buyer is a natural person, the real estate transfer tax is payable. On Mallorca this was 7% until 1 January 2013. Since that date, it has been staggered as follows: up to €400,000: 8%, up to 600,000 € 9%, up to 1,000,000 € 10% and over 1,000,000 € 11%. It is not compatible with VAT (or, for example, with IGIC in the Canary Islands). In addition to the value added tax, there is the notarization tax (Actos Jurídicos Documentados, AJD) amounting to 1.2 percent of the building value. This is transferred directly to the Balearic Islands. The regulations in Spain change very often and are subject to frequent updates.