Usually 10% of the price covers the purchase costs. Although on certain occasions this calculation may be close to reality, the nature of the property and the individual circumstances of each buyer must be taken into account. We explain them in detail below:
1. VALUE ADDED TAX (VAT) OR TRANSFER TAX (ITP)
If you buy a plot to build or commercial premises as a private person, you will currently pay 21% on the buying price. In the case that you buy a new house you should have to pay 10% to the tax authorities. In addition to the value added tax, there is another tax that you will have to pay, the so-called Tax of Documented Legal Acts (AJD) which currently amounts to 1.5%.
For all other purchases, the tax applied is the Transfer Tax (ITP) and will be paid according to the following scale:
Purchase price:
up to 400.000 € a 8%
from 400.001 € to 600.000 € a 9%
from 600.001 € to 1.000.000 € a 10 %
over 1.000.001 € by 11%
2. REAL ESTATE TAX (IBI) AND OTHER LOCAL TAXES
They are paid once a year. The IBI is calculated based on the cadastral value of the property. The amount varies from one municipality to another, but generally amounts to between 0.3% and 1.1% of the value of the land. As for the other garbage and sewerage rates, these are fixed rates that are regulated annually by the municipality’s council.
3. FEES AND CHARGES FOR THE PROPERTY REGISTER AND NOTARY’S
OFFICE
These are set by law on a sliding scale, but you should estimate about 0.5% of the purchase price.
4. PROPERTY TAX
It is an annual tax imposed on owners with a sum of property valued at more than 1,000,000. If you are in this group, you should know that the first 300,000 euros of your main home are exempt, along with the rest of your assets up to the amount of 1,000,000 euros. Taxation applies to both residents and non-residents, although the regulations vary slightly from 0.2 to 2.5% depending on the case.
6. MORTGAGE COSTS
If you need a mortgage to finance the purchase, you must pay only the cost of the appraisal. The rest of the costs associated with the mortgage are regulated by law since 2019 and must be paid by the bank.
7. LEGAL FEES
In the event that you decide to hire the services of a lawyer, you should know that he usually charges about 1% of the purchase price. For our clients we have collaboration agreements with law firms with special rates for our clients.
8. OUR FEES
Our fees are assumed by the seller. Following our policy of transparency with our clients, the fees we charge for the procedures are always reflected according to our rates informed on our website: www.coolhomesmallorca.com