Buying Real Estate in Mallorca Important Tips For First Time Buyers
From the N.I.E. until the notary’s appointment: what documents you need, what you should look out for
By Lutz Minkner 24.04.2018 | 01:00 Buying real estate in Mallorca: That’s the way it works. Photo: Bendgens Photos to the message Buying real estate in Mallorca: What should be considered?
A little guide for you to buying real estate in Mallorca, some important tips for first time buyers. First, a Spanish tax code must be: Without an N.I.E. (“Número de Identificación de Extranjero, Identification for Foreigners”) is almost nothing workable in Mallorca and is used for all essential legal transactions (lease, Purchase of real estate, purchase of a car, conclusion of insurance and banking contracts).
The N.I.E. must be applied for at the Aliens Office in Palma (only with online appointment). There are also service providers in Mallorca, for a manageable fee from 150 € do all the work without you need to travel to Spain. Spanish bank account: The financial world may be fascinated by Bitcoins or Blockchain. In Spain, however, as in the case of grandfathers, the purchase price for a property is usually still paid by a confirmed bank check. For this reason, a Spanish account connection is required, which should be set up at least one week before the notary’s appointment, in order to be able to pick up a check (check, talón) on the purchase price and incidental acquisition costs on the day of certification.
Of course you need an N.I.E. Bank financing request: “I clarify that with my bank in Germany,” says some customer, when he has found the right property, but still wants to finance a portion of the purchase price.The frustration soon follows: Only a few German banks finance a real estate purchase They often shy away from the possibility of lending property in Germany and with this money to finance the Spanish property – which then remains free of charge – otherwise only financing by means of a Spanish bank in Mallorca remains A financing commitment should be taken care of in good time so that you can calmly review the conditions and compare. Even before it comes to the necessary bank talks, however, one has often already decided for a property and bound by pre-contract.
The biggest difference here is: Both a reservation and an option contract for a property in Spain unlike in Germany (§ 311b Abs. 1 BGB) without notarization possible and binding. Even the final purchase contract could be concluded privately without a notary – a land register entry would not be possible but with the fatal consequence that there is also no “good faith protection”, because it is triggered only by the entry in the land register. With the reservation contract the seller agrees to keep the prospective buyer for a few days reservation fee for a usually small reservation fee. If the interested party decides to purchase within the time limit, the reservation fee will normally be credited against the option fee or the purchase price.
If he decides against a purchase, the reservation fee is usually lost. Most property purchases in Spain are preceded by an option contract (contrato de opción de compra). With it, the buyer (option taker) buys from the seller (option provider) the right to buy a certain property on precisely defined conditions within a certain period (option period). The buyer usually exercises the option by summoning the seller to the notary to sign the notarised deed at an appointment within the option period. In practice, this is done by turned-on brokers or lawyers. For the option right, the buyer usually pays an option fee of 10 percent of the purchase price, which in the case of a purchase is set off against the purchase price. As such, this option fee is payable directly to the option provider; in practice, the option fee is usually deposited with a broker, lawyer or notary in a trust account. If the contract of sale fails for reasons for which the buyer is responsible (eg, loyalty to the buyer), the option fee lapses in favor of the option provider.
If the contract fails for reasons for which the option-provider is responsible (eg sale to a third party which offers more), the option-issuer must repay the 10 percent received or release it upon deposit and another 10 percent as lump-sum compensation to the option holder numbers. The notarial contract of sale (Escritura Pública de Compraventa) is the prerequisite for registering the new owner in the Land Registry (Registro de la Propiedad). The Spanish notary has a limited list of obligations in the preparation of land purchase contracts. Unlike in Germany, he does not have to read the document completely; Rather, it is enough if it conveys the essential content to the parties. He also does not have to worry about the execution of the certificate (registration in the property register, payment of taxes, etc.).
This is usually done by lawyers or so-called gestorías. What is the notary doing at the appointment? He checks the personal documents of the parties, their identity and tax numbers, any extracts from the commercial register and the current excerpt from the land register, the collection of which blocks the land register for a period of ten days for the specific authentication process. A Spanish notary also ensures that the property tax receipts, the certificate of viability, the energy certificate and (when selling a property in a community) the attestation of payment of the Community costs. He also checks the origin of the checks. In addition to the data relating to the parties, the deed of purchase agreement essentially contains the exact description of the property with any possible encumbrances, the purchase price and the terms of payment, including, for example, who. to bear the costs of the notary.
After the signature of both the buyer usually hands the check to the seller and receives in return the keys. A copy (“Copia Simple”) of the deed is immediately available to take away. The notary informs the land registry office by fax about the authenticated certificate; for registration, it is also necessary that the original of the document is presented and the taxes are paid to the tax office. After about three to six months, the original purchase certificate can be received by the buyer. “Unterverbriefung”: Why the tax-saving trick does not work anymore In the past, a popular type of settlement of a real estate purchase in Spain was the so-called sub-securitization: part of the purchase price was given to “cash”, only a reduced purchase price was entered into the deed and officially paid by check.The deal seemed to be beneficial for both sides: The buyer saved the real estate transfer tax (between 8 and 11 percent) on the uncertified purchase price share, and the seller saved the taxes on the profit of that part.
However, some time ago, the Spanish State provided Article 57 of Law 58/2003 to the tax authorities for an effective anti-fraud instrument: they can estimate the value of the property and, for up to four years after purchase, a higher purchase tax from the buyer and demand the subsequent taxation of the imputed extra profit. This is now being used more and more often. Appraisal is possible against this estimate, but in the end, an appraisal of the real estate must be submitted in order to refute the tax office’s estimate. A rough Unterverbriefung flies so in any case. For another reason, a buyer on Mallorca should never get involved in a sub-securitization: The buyer saves while buying 8-11 percent real estate transfer tax on the unnotified amount.
When later selling the real estate but on the book profit whopping 19 percent taxes are payable. Unlike in Germany there is no speculative period in Spain, after which a sales profit would be tax-free. In short: The Unterverbriefung brings joy only in the short term, in the long run you pay, so a Milchmädchenrechnung. Source: http://www.mallorcazeitung.es/immobilien/2018/04/24/so-beim-immobilienkauf-mallorca-alles/59155.htmlFor the accuracy of the information provided in this article, SGI-Mallorca assumes no responsibility or liability ,