Buying a property in Mallorca is an exciting endeavour, but it's essential to understand the various costs and taxes involved to make informed decisions. In this article, we'll provide a comprehensive breakdown of the expenses you can expect when purchasing a home in Mallorca.
Property Transfer Tax:
When buying a property in Mallorca, you will be responsible for paying the Property Transfer Tax, known as Impuesto de Transmisiones Patrimoniales (ITP). The tax rate varies based on the property value, typically ranging from 8% to 11%.
Value Added Tax (VAT):
If you are buying a new property directly from a developer or a promoter, you will need to pay Value Added Tax (VAT) instead of the Property Transfer Tax. VAT is currently set at 10% of the property value.
Notary fees are charged for the official certification of property transactions. The fees are calculated based on the property's value, complexity, and the number of pages in the deed. On average, they can range from 500 to 1000 euros.
Land Registry Fees:
Registering the property in the Land Registry is an essential step to ensure legal ownership. The fees are generally around 400 to 1000 euros.
Hiring a lawyer to handle the legal aspects of the property purchase is highly recommended. Legal fees can vary depending on the complexity of the transaction but typically are around 1% of the property value.
If you are obtaining a mortgage to finance your property purchase, there will be associated costs such as appraisal fees, mortgage arrangement fees, and notary fees for the mortgage deed.
Some banks may require a property valuation before approving a mortgage. The cost of the valuation typically ranges between €400 and €700.
It's crucial to protect your investment with property insurance. The cost of insurance depends on various factors, including the property's value, location, and desired coverage.
Once you become a property owner in Mallorca, you'll be responsible for local taxes, such as the annual property tax (Impuesto sobre Bienes Inmuebles or IBI) and the rubbish collection tax (Tasa de Recogida de Basuras).
Ongoing Maintenance Costs:
It's important to consider ongoing maintenance costs such as community fees, utilities, property management fees (if applicable), and any potential renovation or repair expenses.
Remember, these costs and taxes are subject to change and can vary based on individual circumstances, property type, and location. It's advisable to consult with a buyers agent or a legal expert who can provide personalised guidance based on your specific situation.
Understanding the costs and taxes associated with buying a property in Mallorca will help you budget effectively and make well-informed decisions throughout the purchasing process. By being aware of these financial considerations, you can embark on your property journey in Mallorca with confidence and peace of mind.