Buying a property in Mallorca: information & tips

One reason for buying a flat may be the expectation of lower costs than in the case of a flat to rent. However, it is important to obtain precise information in advance, for example about Spanish tax law and expected costs such as, possibly, service charges. Also check – if you are buying from a private seller – their right of disposal and make sure that there are no outstanding tax debts.

Equally, insist on an individual contract instead of a standard form contract and invest in a notary to draw up a notarial purchase contract (escritura pública de compraventa), in which all agreements are recorded in detail. Clarify your obligations as an owner as well as any special usage rights, e.g. with regard to cellars, storage rooms, gardens and, above all, the roof terrace, as the latter is often used as a selling point but is not a private terrace but "only" a communal terrace. If you have not yet applied for a Spanish tax number (número de identificación fiscal para extranjeros, or NIE for short), do so in good time, as you are obliged under Spanish tax law to submit your tax returns independently and on time. Furthermore, the NIE is required for the correct registration of your flat in the Land Registry.

When buying both a new and a second-hand flat, it is essential to check both the registration in the Land Registry (registro de la propiedad) and its reference with the Cadastre (referencia catastral) and compare them with the actual situation. Here it is important to know that the Cadastre and the Land Registry are separate institutions in Spain. Accordingly, the existing entries may also differ from each other and have different levels of up-to-dateness, so you should definitely check both.

The Land Registry entry is not only helpful when acquiring entire plots of land, but also when buying a flat. It must be checked whether the living area is correctly stated and whether debts or encumbrances are registered for the property in question. These can be an indication of matters that must be clarified before signing the contract so that you, as the buyer, are not later held liable for entries for which the previous owner is responsible.

The registration of the title deed in the Land Registry also provides additional legal certainty and, when reselling the flat, is the official proof that you are the owner of the flat. The information in the Cadastre serves, for example, as the basis for the annually payable property tax and income tax, so it is definitely advisable to be informed here. If corrections and adjustments to the entries need to be made, it is also advisable to arrange this in good time and, if possible, to place it under the responsibility of the seller.

The quality of the building fabric and modern fittings can be decisive advantages of a new-build flat. If you want to buy such a residential property for these reasons, you should definitely find out in advance about a valid building inspection - granted by the responsible municipality - as well as a certificate of occupancy. If there is a community of owners involved, you should find out about possible obligations as a co-owner of the community and ensure whether and what costs will come your way from this direction.

You will usually purchase a new-build flat from a developer or a trading company acting as a legal entity. In this context, Spanish sales tax or value added tax (impuesto sobre el valor añadido, or IVA for short) is due. Its amount for flats is 10%, since the tax rate was adjusted in 2012. Attention: Not yet completed residential properties - as well as building plots, by the way - are even taxed at 21% IVA. This tax is levied centrally and must be paid to the central tax office accordingly.

When buying a new-build flat on which IVA has to be paid, the Stamp Duty / Stamp Duty Land Tax (impuesto sobre actos jurídicos documentados, or AJD for short) is usually also payable. In Mallorca, it amounts to 1.2% of the property value and is paid regionally, i.e. in this case to the Balearic Islands as an autonomous region of Spain.

In addition, when buying a flat, the corresponding registry fees as well as the fees for the lawyer and the notary who notarises the purchase contract are of course also incurred.