Best of Mallorca | 2018
Mallorca has been attractive to foreign real estate investors for many years and certainly for good reasons. Everyone dreams of 365 days of sunshine, the cool Spanish lifestyle, the famous tapas, the beautiful alleys in the old town. And all this within range of only few hours flight time from the continent. During the last few years, lots of companies have achieved high profits by investing in real estate on the Balearic Islands, particularly in Mallorca, due to the rising prices.
In order to buy property in Spain you need a local lawyer with know-how who is familiar with all procedures and legal aspects of the process. On the one hand, you need to make sure all details of the contract are correct; on the other, you have to run a deep check of the legality of the property. Consequently, wide ranging due diligence is usually performed by a specialized architect. Questions such as “Is the pool legal?” get sorted out during this process. Because people don’t buy houses every day it is an important decision, requiring sizeable portions of family savings and thus demanding good advice and professional handling.
The most frequently asked questions are regarding the tax system. In Spain there are different taxes depending on the type of transaction, and each region has different rates. For what applies to the Balearic Islands nowadays: purchase of a new property 10% VAT, purchase of a used property 8–11% property acquisition tax
It is important to choose the right contract in order to protect your rights. The most common is the option contract that guarantees the buyer the right to buy a given property until the agreed deadline. A purchase contract containing an earnest-money-deposit clause obliges the seller, in case he withdraws from the contract, to refund double the deposited amount to the buyer. A normal purchase contract commits both parties in equal manner from the moment of signature.
The deposit paid at the signing of any of these contracts is usually 10% of the purchase price. Due to rising demand and the current market situation it is important to rely on a specialized lawyer when buying or selling property on the Balearic Islands.