Purchase and sale expenses in the Balearic Islands
When you make the decision to buy a property, you put all your illusions and energy to achieve what is closest to what you want. The key, and sometimes unknown, moment is when the costs, including taxes and expenses, that the process entails are ascertained and added up. In this article we are going to expose the points to take into account for both the seller and the buyer, taking into account the geographical and real estate situation of the Balearic Islands.
Expenses to be paid by the buyer
Even today, there are still many individuals who, in their desire to purchase a home, ignore certain payments that they must make. A new home is not the same as a second-hand home. According to the INE, the Balearic Islands is the third Spanish community in this activity, after Valencia and Andalusia.
In any case, before betting on a house wherever it is, it is advisable to make a list of the expenses to be assumed by the buyer. According to data from 2018 a hypothetical home would deduct approximately 700 euros of notary expenses.
– The lawyer:
If there is the intention of hiring this professional, who can always guide the buyer and protect him legally, it is necessary to think about his fees, which are particular to each one, although they are usually around 1% of the price of the property.
– The deeds of sale:
It is not mandatory to sign them, but they provide legal security (they are signed in 99.99% of the cases). They indicate the agreement of both parties, seller and buyer.
They are deducted for registering the purchase-sale in the Land Registry (task to be carried out by the agency among other administrative procedures). Although registration is not mandatory, it provides certain advantages, such as allowing access to a mortgage, ensuring the identities of seller and buyer… The securities are ordered by law. Following the 2018 reference data you can deduct about €450 of costs.
– Taxes on new or new homes:
The buyer will have to pay the VAT or value added tax. The value is 10% added to the sale price, more than social housing, which is taxed at around 5%.
In the Balearic Islands, the tax on documented legal acts (AJD), or the public registration of the property, is levied at 1.2% of the sale price, while social housing is exempt from this tax, and the transfer tax is already included.
– Tax on second-hand homes, the ITP (Impuesto de viviendas de segunda mano):
In the Balearic Islands it acquires a value of between 8-11%, always depending on the amount of the property. This value is reduced in the case of large families, young people…
*Law 14/2018 of December 28, 2018. of the General Budget of the Balearic Islands for this year, 2019, points out that when the value of the home is 200,000 euros or less, and always being the first home for the buyer, a value of 5% will be applied. This reduces the previously established levy.
– Official appraisal:
In the case of requesting a loan or mortgage, it will be the bank who will give the approval, and before him it is necessary to respond with the expenses of appraisal (they would be between 200-700 euros approximately), of management and of registry. In this process, and in order to know the final payments to be made, the bank has the last word.
Expenses for the seller
– Real estate agency:
In the Balearic Islands, it is the seller who must pay the real estate agent’s fees. The value is between 5 and 6% of the price of the property depending on the type of real estate (modern real estate agencies that work with professional websites, online advertising campaigns, professional photography and videography usually charge 6%), including, as a general rule, the administrative procedures.
Often it is a manager who takes care of the registration and tax formalities, and will check that everything is properly regulated. It is usually around 300€ approximately.
– Tax on the increase in urban land value (municipal capital gains tax):
The municipal capital gain is deducted when the land on which the property is located has increased in price, within a maximum period of 20 years, until it becomes someone else’s property. When it is less than 1 year, it is not taxable. If it can be demonstrated that there has been no increase in value, it will not be necessary to make any financial reimbursement.
– Personal income tax (IRPF):
The homeowners have to take care of it. This will not be the case, among other exceptions, when the seller is over 65 years of age or is considered disabled.
– Real estate tax (IBI):
This tax is paid annually to the city council, with a value that ranges between 0.4-1.1% of the cadastral price of the property, or in other words, half of its market value.
If the buyer needs more information, the real estate agent can provide the seller with a report of all payments.
Finally, it is important to note that there are online simulators to find out the payments to be made, based on the price of the property and in which Autonomous Community it is located. If this is overwhelming for you, remember that if you ask a real estate agent, they should provide you with a listing of this information and the costs, no problem.
Written by Ana M. Longo