Buying a property is one of the most important decisions made throughout life. Although the buying process can sometimes generate certain doubts in the buyer, it is best to contact a specialised agent who can help in the purchase decision, showing you the best properties according to your needs, as well as accompanying you throughout the process.
Buying a property is one of the most important decisions made throughout life. Although the buying process can sometimes generate certain doubts in the buyer, it is best to contact a specialised agent who can help in the purchase decision, showing you the best properties according to your needs, as well as accompanying you throughout the process.
At Pure Living Ibiza we have more than 12 years of experience in buying and selling properties in different areas of Marbella and Ibiza, that is why we want to help you solve the most frequent questions buyers have when buying a property.
The first step to buying a property in Ibiza is to find the property of your dreams. For this, it is vitally important to have the experience of one of our real estate agents, who will guide you by showing you the properties that best suit your needs in the best know areas in Ibiza.
Pure Living recommends that you retain the services of a local specialist attorney. We work with the best offices in Ibiza, they will recommend the professional that best suits you according to your profile; someone who speaks your language, has extensive knowledge in real estate, tax and commercial contracting and who will also help you get your Golden Visa if you need it in the future.
The first step is to formalise your offer on the property and remove it from the market, thus protecting your interest to purchase. Once the terms of the purchase have been discussed and the seller accepts the offer, a binding agreement is born, which is sealed by signing a reservation contract. This includes payment of a deposit to reserve the property prior to the exchange of a private purchase contract.
This reservation fee is fully refundable in case that the checks carried out by our lawyers unveil any legal obstacles which affect the buying process.
The reservation is accompanied by a payment of 1% in our client account in order to secure the property and stop it from being shown to potential clients.
The purchase of a property in Spain involves, both for residents and non-residents, a series of fiscal obligations which must be met:
a) New Properties:
The IVA tax (VAT) is applicable to the purchase of new properties and urban plots (which have never been transferred before). It amounts to 10% of the purchase price, and 21% for the purchase of urban plots. This tax must be paid on each instalment.
In addition, the obtaining of the title deed is also subject to Stamp Duty (AJD Tax, tax on Conveyance of Assets and Documented Legal Procedures) at 1,5% for properties below €1,000,000, and 2% for properties above that amount.
b) Resales:
When properties have been already transferred before, the applicable rate is not IVA but ITP tax (transfer tax). The rate of ITP is calculated according to the following scale:
0 € – 400.000 €: 8%
400.000 € – 600.000 €: 9%
600.000 € – 1.000.000 €: 10%
1.000.000 €- 2.000.000 €: 11%
>2.000.000: 13%
Note that the total costs associated in a property purchase transaction are normally between 10% and 15% of the purchase price (without a mortgage involved).
The IBI tax must be paid to the corresponding Town Hall every year, in one payment to be made between August and November (this is the usual period; however it might change in accordance with each Town Hall). We can ensure this payment is made by direct debit from your Spanish bank account.
Anyone who owns properties in Spain must file a tax return with the Spanish tax authorities. The Tax Office calculates an annual Imputed Income as a percentage (1.1% to 2% depending on the Town Hall) of the Cadastral Value of the real estates. Note that the Cadastral Value is normally significantly lower than the market value. On the Imputed Income, Income Tax is 24% for non-EU citizens, and 19% for tax residents in the ECC (Economic European Community).
If you decide to rent out your property, the above Income Tax would not apply for the periods in which the property is occupied, and a separate tax declaration must be filed accordingly.
In that case you pay Tax on Rental Income.
As a general guideline, the percentage of tax you pay on profit is 24% for non-EU citizens, and 19% for tax residents in the ECC (Economic European Community).
We advise that any person who owns a property in Spain, but is not resident there the entire year, should designate a ‘fiscal representative’ who will carry out all the procedures necessary before the tax authorities. As we also offer this service, please check with our non-resident tax department in this regard.
Capital gains tax is payable based upon the increase between the original purchase price of a property and the selling price. This tax applies to the seller, and is levied at 19% in the case of non-residents.
Anyone purchasing a property from a non-resident must withhold 3% of the purchase price, which is then paid to the tax authorities on account of any liability by the vendors. The vendor then has a 3-month period to pay the rest of this tax to the tax authorities. There are situations in which the tax due would be less than the 3% withheld, in which case it needs to be claimed back from the tax office. We will be pleased to assist you in that matter.
If you are (non-) resident in Spain, you may be liable to pay Wealth Tax (Impuesto sobre el Patrimonio) and Temporary Solidarity Tax on Large Wealth (Impuesto temporal de solidaridad de las grandes fortunas). They are applicable to all possessions you have in Spain (if you are non-resident) or to all possessions worldwide (if you are resident).
With regard to the Wealth tax, each region has the power to regulate this tax. For non-residents the tax starts when an individual has a net wealth of more than 700.000€ (in Spain) or when the gross wealth is more than 2 million (in Spain). In Balearic Islands the approved scale since 2022 is the following:
The applicable rate for the Temporary Solidarity Tax on Large Wealth is:
There are various basic formalities you must take into account when completing your property buying process in Spain:
To be your legal representative in Spain, it is essential that you grant Power of Attorney in our favour so we can act on your behalf. With this Power, we are able to sign contracts, deeds and all documentation related to your purchase process. We will draft the Power of Attorney which can be signed, at your convenience, either in Spain or in the country of your preference. Whenever applicable, we will also provide instructions for the Power to be stamped with the Apostille of The Hague or Consular legalization, making the Power valid in Spain.
The N.I.E. is the ID number that foreigners use in Spain, and is issued by police authorities. Without this ID number it is impossible to buy properties in Spain or obtain service contracts for utilities. Applications to obtain a N.I.E. number tend to take certain time to process, so it is very important to present your application for a number at the beginning of the buying process.
It is essential to have an account in a Spanish bank in order to contract utility services and to pay them by direct debit. We are able to open a bank account in Spain on your behalf.
Although it is not compulsory to have a Will in Spain, we strongly recommend you to have one. A Spanish Will usually makes procedures easier and quicker in Spain. Without a Spanish Will, finalising an inheritance procedure can take up to one and a half or two years in some cases. Spanish authorities apply tax penalisations if these matters are not dealt with promptly.
According to Spanish law, when a property is jointly owned by two people and one of them dies, their part is not automatically transferred to the other title holder. It will be transferred in accordance with the Will of the deceased, or, if there is no will, in accordance with laws on intestate succession.
To obtain a NIE, it is necessary to meet at least one of these three requirements:
As well as carrying out the following steps:
– Request a prior appointment at the Immigration Department
– Fill in the EX18 form, which can be downloaded here
– Once completed you must print it and present the original and a photocopy of it on the day of the appointment, along with your passport, a photocopy of it and the corresponding documentation that proves that you meet at least one of the requirements mentioned above. As well as the bank receipt of having previously paid the Model Rate 790 Code 012.
Once all the most frequent queries when buying a property in Ibiza have been resolved, from Pure Living Ibiza we want to state that the real estate sale process in Spain is an extraordinarily safe process as the transmissions are channelled through a “double public system of guarantees ”, made up of the Notary and the Property Registry.
Therefore, we encourage all potential buyers interested in Ibiza to take the opportunity to acquire a property in one of the most recognised areas of Spain.
A close and efficient team, with hundreds of sales and thousands of rentals behind them, and an extreme knowledge of the most exclusive areas of Marbella. This is what we offer our clients. We will be delighted to help you on any matter you need.
Javier NietoCEO / General Manager
javier@purelivingibiza.com