Mallorca properties for sale

Buying property in Mallorca

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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.

It is imperative that you make the purchase accompanied by a specialist local lawyer.

Tax declaration in Mallorca

As the owner, you must not forget the annual tax return to the Spanish tax office. A distinction is made here in individual cases as to whether the limited or unlimited tax liability is applied. If you stay more than 183 days per year in Mallorca, you are subject to unlimited tax liability. You must then be assessed with all your income and assets in Spain. Here, attention must also be paid to the double taxation agreement between Germany and Spain. As already mentioned, it is very useful to consult an expert, for example a lawyer, about the many aspects.

What about the different property prices in the different regions of Majorca?

The price differences are very large, most price-intensive, because most popular, are the classic regions for holiday homes in the southwest, Alcudia and Can Picafort. Other places with a high investor share are Magaluf, Cala Millor, Playa de Palma and of course Palma. In recent times, the southeast is one of the more popular investment destinations with many new real estate offers. After the real estate bubble burst 25 Years ago, real estate prices for residential properties below the luxury segment in Spain also fell sharply for the time being, but have now stabilized again. While there is a three-room apartment in the best location at prices starting at 500,000 euros, the price for a comparable property in the centre of the island or the Tramuntana region is around 30% lower. Here you will find beautiful new apartments starting at 350,000 euros. As you can see, it depends very much on the region in which demand is at its highest.