If you are thinking of buying a property on Mallorca, we have put together some important information for you. Starting with the classification of plots of land, to the costs of a purchase or sale, there are some peculiarities that need to be considered when buying in Spain. Especially if you are buying a plot of land to build on, you are making a long-term decision and therefore we want to make sure that you are informed about all the important aspects.
What is important?
It is fundamentally important to know the difference between urban and rural building plots. While urban building plots are located in the urban area of a municipality and are connected to the public utilities, electricity and water supply as well as postal services and refuse collection, this is not the case with rural building plots outside the urban areas. Apart from utilities, the most important difference is use of land. The use of rustic land is limited to agriculture or livestock and is therefore not intended as residential land. For this reason, the construction of a holiday villa is only possible if certain building regulations are observed.
What do you need to consider?
Once you have decided to buy an urban or rural property, the question is what other important aspects to consider.
On Mallorca, there are many protected areas that may not be built on. Many other areas are subject to special urban restrictions. Here it is important to check carefully whether the selected plot or part of the plot can be built on, or whether there are restrictions on the building conditions. It is also important to know that in Spain the neighbours of a plot for sale always have the right of first refusal.
Once you have made the final decision to buy the property you need to consider the bureaucratic issues. What documents are needed to buy or sell a plot of land?
• The title deed is indispensable, and the seller must be able to provide a copy to the potential buyer
• Descriptive and graphic cadastral evidence. The landowner or the notary can request the descriptive and graphic cadastral certificate of the plot from the land registry. The boundaries and surface of a plot of land can be checked with maps and aerial photographs on the cadastral websites
• Simple notice from the land registry to verify the seller’s ownership and possible encumbrances on the land
• Certificate of irrigation rights for urban land, which the owner can request from the residents’ association
• A certificate of any development on the land. Whether urban or rural land; if the land is built on and this is not noted in the title deed, it would be advisable to obtain a certificate of the existence of a house. This document can be prepared by a professional surveyor who will certify the area and age of the house. This is especially important in the case of rustic plots of land, as it allows you to build a new house with the square metres that were previously built on. For this reason, it is important that this information is formally recorded in the purchase contracts in order to obtain the licence for the building.
Which costs are involved?
However, before you buy or sell, you should be aware of the costs involved. Firstly, there is the purchase tax on the resale of the property – ITP (Impuesto sobre Transmisiones Patrimoniales Onerosas). This is based on the sale price of the property:
• Sales price up to €400,000 – the ITP is 8%.
• Selling price from €400,001 to €600,000 – the ITP is 9%.
• Selling price from 600.001€ to 1.000.000 € – the ITP is 10%.
• Selling price from 1.000.000 € – the ITP is 11 %.
If the seller of the land is a company (SL), then the land transfer tax (ITP) does not apply, but 21 % IVA (value added tax) is charged. In addition, a stamp duty of 1.5 % is levied – AJD (Actos Jurídicos Documentados). Finally, there are the notary fees and the costs of re-registration.
In any case, we are happy to advise you if you are thinking of buying a property on Mallorca. Our qualified real estate agents will familiarise themselves with your request and will offer personalised advise.