Pre-sale information
The fee for Mallorca Invest Hoffmann Group is 1% of the sale price of the property.
Step 1 - Contacting the Vendor etc
First of all LexJahnel will be
contacting the property
agent, the vendor and all
lawyers involved in order to
receive the information we
need to pre-examine the
property.
Step 2 - The Power of Attorney
The Spanish legal system is
strict when it comes to sign
contracts. In case you do not
wish to travel from and to
your country of residence to
sign all documents necessary
to acquire the real estate you
may sign a power of attorney. This document needs to
be signed at a notary public
of your convenience and will
enable us to execute legally
binding contracts on your behalf. Such contracts may be
the option contract, a private
purchase contract, or the
public deed of purchase (Escritura).
Please note that a power of
attorney is ONLY necessary
in case you DO NOT WISH
to travel to Spain to sign any
deeds of purchase personally
Step 3 - The Contract of Option
Once LexJahnel has examined the vendor and the
property we will prepare a
binding contract that secures
your rights to purchase to
property for a certain period
of time. Within this time limit
the vendor will be bound by
his promise to sell his property to you. Should he default on his promise you will
be entitled to compensation.
Upon signing of this contract
of option the seller asks for a
deposit of about 10% of the
purchase price. You should
prepare for this sum, which
may be paid in cash, by bank
transfer or cheque.
However, should you default
on the contract and not purchase the property within the
set time, for personal reasons,
you will lose the consideration paid.
During this period, the purchase may prepare the purchase price or his move to
Spain. The vendor will organize, for example, the removal of his personal belongings from the property as
possession is to be granted
upon signing
Step 4 - The Due Diligence
In order to secure you from
surprises after you acquired
your new home LexJahnel
will undertake searches into
the state of the property. In
the course of this investigation, we will be looking into
questions of the ownership of
the real estate, possible debts
or mortgages against the
property. If there are any
third party rights affecting
the estate, steps will be taken
to cancel those rights.
LexJahnel will also make
sure that on the signing of
the contract both, electricity
and water will be available in
the property (if applicable).
Step 5 – The Public Deed
There are various ways to
convey ownership of real estate in Spain. Some of them
are secure, others not, as they
cannot protect the purchaser
effectively from later surprises.
LexJahnel will prepare that
the ownership of your future
home is conveyed by signing
a public deed of sale-purchase, called Escritura. It is
the signing of the Escritura,
which is the most secure way
to acquire ownership. Only
the Escritura can be registered in the Land Register,
which in turn protects your
title in the property effectively.
The public official in front of
whom the Escritura will be
signed is called Notario. The
transfer of legal ownership of
the property on completion
of the purchase must take
place in a public notary in
Spain.
Before preparing the Escritura the Notario will need
to see that the purchaser receives the right property and
that the purchase price has
been paid to the vendor.
The purchase money must be
deposited in your account in
Spain before completion of
the Escritura. Upon signing
the payment has to be effected either via bank transfer, cheque or cash. A normal
way of payment is by
banker’s draft. We will inform you as soon as possible
about the preferences of the
vendor, so that you can coordinate the payment in advance.
When the vendor is a foreign
non – resident the purchaser
must retain 3% of the purchase price. This retention is
to be paid 30 days after the
signing of the deed to the
Spanish Tax Office. The nonresident vendor receives,
therefore, only a total of 97%
of the purchase price on the
day of purchase.
As we have already pointed
out above, your attendance
will not be required when
signing the public deed, as
long as we are authorised to
sign those papers for you by
a power of attorney (see Step
2).
The property is now yours!
Step 6 – The Property Register
It is important to remember
that the notary will only wit-
© Matthias Jahnel, LL.M., 2001 – 2023
LexJahnel – Update: 2023
ness the signing of the Escritura. He will not take care
of the registration of the title
nor any tax payments due.
Later on LexJahnel will arrange for it to be registered in
the Local Property Register
in your name. Upon registration you will be listed as the
new owner of the real estate,
securing your rights against
any interests from third
parties.
Step 7 – Payment & Taxes
After the signing the notary
collects his own fees, which
are charged in accordance
with the Schedule of Notary
fees set by law.
Next to the purchase, taxes
will be due.
Taxes that will be born by the
purchaser are first of all the
so-called ITP tax (stamp
duty). This tax is levied on
the purchase of the property
(for second hand homes) at a
rate of 8% to 13% of the price
declared in the Escritura and
increases as follows:.
-8% tax of up to 400.000 EUR;
-9% tax between 400.001 EUR
and 600.000 EUR;
-10% tax between 600.001
EUR and 1.000.000 EUR;
-12% tax in case the purchase
value is above 1.000.000 EUR;
-13% tax in case the purchase
value is above 2.000.000 EUR.
Only in case of a purchase of
a building plot the purchase
tax will amount to 21% VAT
plus 1,5% Stamp duty. If you
purchase a new built or a flat
off plan, than purchase taxes
of 10% VAT and 1,5% stamp
duty will apply.
Next to the ITP tax a further
tax known, as Plusvalia is
due. This tax is a local tax
charged by the town hall. It is
based on the increase
between the official value
(valor catastral) on the day of
purchase and the present official value of the land on the
day of sale as recorded in the
Town Hall’s index. Plusvalia
tax applies to the seller. The
tax is due 30 days after the
sale took place.
To have a rough idea on the
additional purchase costs one
should calculate about 10% –
15% external costs over the
price of purchase to pay for
all expenses of the purchase.
This amount may increase in
case you need to finance your
by taking out a Spanish mortgage
All taxes are due within 30
days of purchase. Taxes
which are not paid will cause
the property to be charged.
Upon default of payment, the
property may be sold in a
public auction.
LexJahnel will make sure
that all taxes are paid on
time.
Some words to under declaration. There is a widespread
opinion that taxes may be
“saved” by under declaring
the real purchase price in the
deed of purchase.
LexJahnel does not support
this kind of tax evasion.
Apart from the fact that this
praxis is illegal and may
cause you to be prosecuted
and to be put in prison, we
have to advice you that in
case you are caught a hefty
fine and late payment interest of up to 25% will be
levied.
Furthermore, the Spanish authorities reserve the right to
review the selling price.
Should they understand that
the consideration has been
under-declared by more than
20%, the difference between
the official tax valuation and
the declared price will be
considered a gift. The vendor
will be assessed additional
capital gains tax of 19% for
EU citizens and 24% for none
EU citizens on the difference
and the purchaser will be liable to gift tax. If the price is
by 50% under declared the
Spanish authorities have the
right to expropriate the new
owner returning only the declared price to him.
After the Purchase
After you have taken possession of your new home you
should remember that you
are liable for taxes on your
property in Spain. Those
taxes can be split in local and
central government taxes, of
which the so-called IBI –
yearly municipal real estate
tax– as well as waste charges
are the most important liabilities.
Further, you will also be requested to pay income tax.
The rates depend on your income (i.e. rental), which includes yearly deemed income
on your Spanish property,
and whether or not you are
resident in Spain. The tax
rate for EU citizens is 19% in
2016. For none EU citizens
the tax rate will be 24% from
2015 onwards (2012, 2013
and 2014 = 24,75% for EU
and none EU citizens).
Annual returns have to be
handed to the authorities in
June of every year.
Wealth tax has been re-introduced in 2012. A general
threshold of 700.000 EUR applies per person and per
year. A higher threshold may
apply depending in the
autonomous region where
the assets are located. Wealth
tax is declared in June.
Please be aware that in Spain
all taxes are “self-declared”,
hence no reminder or payment request will be made by
the tax office. However, in
case a tax payment due is
missed, a hefty fine will apply.