What expenses will a buyer or seller have, including taxes, identifying the economic effects that the purchase brings for the buyer if it is a new build or a second hand home and the costs which the buyer will face.
If you are going to buy a property you should have in mind an additional 10-13% of the total price for expenses, fees and taxes. This will depend on the various aspects which we are about to explain.
We will begin by analysing the indirect costs:
The notarial expenses are produced when the public deed of the purchase-sale is granted. Usually the buyer is in charge of this. Its cost is set by regulations and are referred to as notary fees. Here is a brief summary of what these expenses can assume in a purchase without a mortgage:
|Property Price||Approx. Cost according to the OCU|
|300.000 euros||300 euros|
|500.000 euros||450 euros|
|700.000 euros||520 euros|
|1.000.000 euros||600 euros|
|1.500.000 euros||720 euros|
|3.000.000 euros||1.100 euros|
These are the fees generated by registering the purchase-sale in the Land Registry. The buyer is obligated to pay these fees. They are also established by regulations and their amount depends on the price of the property.
|Property Price||Approx. Registration Cost according to the OCU|
|300.000 euros||280 euros|
|500.000 euros||335 euros|
|700.000 euros||385 euros|
|1.000.000 euros||460 euros|
|1.500.000 euros||560 euros|
|3.000.000 euros||780 euros|
In the instance that the services of a solicitor is required, their rates can be extremely high. As a reference they should be between a 0.5% to a 1.5% of the value of the purchase. Berkshire Hathaway HomeServices Nova Mallorca can recommend the best solicitor for your purchase-sale in regards to the language and characteristics of the transaction.
In the instance that a mortgage is needed for the purchase of a property, you should have in mind the costs created in regards to the requesting and development of a mortgage which will be paid to the bank. They are the assessment fees, notary and registry charges related to the writing of the mortgage lending contract. It is worth negotiating with the bank before signing for the loan.
The administrator is the person who carries out the registration processes and the pending taxes. They do not charge a high cost but it should be taken in to account.
Taxes for buyers:
· 1 In the instance of newbuilds:
· 2 In the instance of it not being a new build:
We begin by looking at the indirect costs to then move on to the subject of taxes.
The seller must prove by means of a certificate issued by the community administrator or the President that they are up to date with payments.
Real Estate Agency fees:
In Mallorca the real estate agency fees which relate to the searching of a property, are paid by the seller and can vary between 5 and 6% of the value of the property. Real estate agencies with experience and a good reputation such as Berkshire Hathaway HomeServices Nova Mallorca include these costs the legal verification of the property and other administrative procedures.
It is possible that the seller will need to hire an administrator to carry out the legal and tax procedures such as the payment of the Municipal Capital Gains which we will not be moving on to.
Real Estate Tax (IBI):
This is a tax which is paid annually to the Town Hall and is around 0.4% to 1.1% of the property value (amount which at the beginning should be as a maximum half of the market value). Before signing the deed the seller must confirm that this tax has been paid up to date. Sometimes the payment is divided, between the buyer and the seller in regards to who was the property owner during what months.
Other possible fees:
You should also consider the charges which come with requesting the habitability of a property such as the energy efficiency certificate, documents which are required for finalising the sale.
It is also important to know that there are tax deductions in the case of a sale for habitual residence, so the seller can deduct the investments and expenses caused by the purchase, notary expenses, real estate agency, municipal capital gain, by which it is advisable to keep all the invoices of expenses attributable to the purchase of the property. The bank interest derived from a mortgage loan is not a deductible expense.
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