Special aspects when purchasing a newly constructed property from a developer

Pay attention to these special aspects when purchasing a newly constructed property

Have you decided to buy a newly constructed property on Mallorca? So that nothing stands in the way of the fulfilment of your desire, you should be aware of the fact that in addition to the actual property price from the price list, there will be additional costs.

When purchasing a new-build property, you do not pay land transfer tax, as you would for an existing property, but you do pay 10% value added tax (IVA).

You will have to calculate approx. 13% ancillary purchase costs in total.

What are the ancillary purchase costs for a new-build property?

  • 10% Value Added Tax (IVA) on the purchase price – once only.
  • 1.5% stamp duty (AJD – Impuesto sobre Actos Jurídicos) – on the purchase price – once only.
  • Notary fees – once only.
  • Fees for the land register entry – once only.
  • Settlement fee for a lawyer/translator – once only.

 

Start-up costs and ongoing costs

Once you have taken possession of the property, you will be responsible for the following items:

  • Meter registration (electricity/water/gas) – one-off (check the developer’s terms and conditions as to who pays this).
  • future electricity, water and gas costs according to consumption.
  • Property tax and rubbish fees – annually. Depending on each municipality.
  • House fees, according to the resolution of the new owners’ association (if given).

 

Equipment & special requests for developer properties

Ask the developer for a clear overview of additional costs for equipment variants and in relation to your special wishes. Furthermore, it should be clarified whether a parking space, as well as a storeroom, are included in the package price or whether these have to be paid separately in each case and what the prices are in that case. 10% value-added tax (IVA) must also be included in these prices.

Bank Transfers, Bank Certified Cheques, Mortgages & Powers of Attorney

Fees should also be expected in the context of money transfers. Depending on the bank, there can be fees of several thousand euros for international bank transfers, especially for instant or quick transfers. For transfers from or to Switzerland, please clarify the fees in advance. Spanish banks charge between 0.5 and 0.9 per mille of the cheque amount to issue bank-confirmed cheques. Payment by bank-certified cheque is (still) compulsory if the seller is a resident of Spain and also if the seller’s mortgage is to be canceled.

If you decide to purchase the property with financing, your mortgage deed will also incur notary fees and fees for entry in the land registry. Depending on the bank, the banks will also cover these costs.

If you need a power of attorney for the purchase of the property on Mallorca, this must be certified by a notary. If the power of attorney is issued by your notary in your home country, there will be notary fees, costs for the apostille (certification by the local court), and costs for the preparation of a certified translation.

Would you like more information on the payment process? Please take a look at our blog “Payment procedure in Spain”.

If you have any further questions, please do not hesitate to contact us.
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