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What you need to buy a property in Ibiza

Buying a property in Ibiza may seem daunting at first, but it can be very simple if you have the necessary information. In Ibiza Country Villas we want to help you make the buying process easier, that’s why we have created a guide with the basic information regarding the purchase of a property and what expenses to expect.

It is also important to notice that at Ibiza Country Villas we take care of every detail throughout the process, such as arranging the first visit to the property registry office, the notary organisation, etc.

We are always at your complete disposal and are happy to answer any questions or doubts you may have. We analyse each case in depth and offer a personalised service for each client.

As a guideline, the costs associated with the purchase of a home in Ibiza are around 10% of the total cost.

Prerequisites

NIE (Spanish Tax Identification Number)

If you do not have Spanish nationality, the first thing you will need to do is to obtain a Spanish identity number (NIE). This is a personal, unique, exclusive and non-transferable number that identifies the non-Spanish people.

The NIE is necessary for all documents that are issued or processed. For example on the deed of sale (together with your passport or identity card of your nationality), when paying taxes or opening a Spanish bank account.

To apply for it, you can do it personally at a police station in Ibiza or anywhere in Spain, at a Spanish consulate in the country where you live or through a representative in Spain, such as a lawyer. In the latter case, apart from the documentation requested by the national police, it is also necessary to give power of attorney from the applicant to the intermediary who processes the NIE.  At Ibiza Country Villas, your trusted real estate agent in Ibiza, we can get you in contact with experts who can carry out and speed up this procedure, so please contact us if you are interested.

Spanish bank account

If you own a property in Ibiza you need to have a Spanish bank account in order to be able to pay all your utility bills and other taxes, such as the council tax. You can open a bank account in person at any bank or online (in those banks that have this option). Please note that to open a bank account you need to have a NIE beforehand.

Expenses incurred in the purchase of a property

  • There are two possible taxes on a property purchase:
    • Personal Transaction Tax (ITP) (second-hand properties)
    • Value Added Tax (VAT) (new properties)
  • Lawyers or agency fees
  • Mortgage costs (if you have one)
  • Notary and land registry fees
  • Bank charges (when you buy a property you have to pay these at the notary's office by cheque or bank transfer which entails costs).
1. Tax on the purchase of a property

This is a tax that must be paid when buying a property in Ibiza to the Spanish or Balearic tax office depending on whether it is ITP or VAT.

Both taxes can vary depending on the total value of the property being sold.

  • Personal Transaction Tax (ITP): this is a tax that has to be paid when it is a second hand property, even if it is completely renovated. This must be paid at the autonomous community Tax Office in which the property is located, regardless of where the sale has been signed. In the case of Ibiza it is at Agencia Tributaria de las Islas Baleares.

The types of percentages that have to be paid are:

    • Up to €400,000 (8%)
    • €400,000 – €599,999 (9%)
    • €600,000 – €999,999 (10%)
    • More than €1.000.000 (11%)
  • Value Added Tax (VAT): This is a tax that has to be paid when the property is newly built. This must be paid to the Spanish Tax Office.
    • 10% for dwellings
    • 21% land, commercial premises, storerooms and garages

Newly built properties have another tax implicit in addition to VAT, Documented legal acts (AJD), which is the 1,5% of the purchase price.

2. Lawyers' fees

For those who use the services of a lawyer for legal advice, their fees can be 1% of the purchase price or more.

3. Mortgage loan charges

If you have requested a mortgage from the bank, you have to bear the cost of the property appraisal. This has to be done before signing the deed of the loan (in order to start paying the capital and interest on the amount borrowed) and even if the bank does not grant you the loan afterwards.

The appraisal will allow the bank to know the value of the property you wish to obtain and thus be able to calculate the amount they can lend you according to the capital requested, income, etc.

The cost will depend on the size of the property and can vary between € 300 and € 3.000.

The rest of the costs associated with the mortgage such as the notary, registration, agency and stamp duty are borne by the mortgage bank.

4. Notary and land registry fees

There are some notary fees involved as well as the cost of registering the deeds (that have been signed before the notary in the corresponding land registry). These are fixed by law and the total amount depend on the price of the property, but normally they don’t exceed 0,5% of the purchase price.

As the price of the property increases, the percentage decreases, so it can be paid even less.

Also affects the cost if a notarial deposit has been made, the number of pages used and the number of copies needed.

5. Bank charges

They vary according to the bank and the payment method.

From Ibiza Country Villas, your reliable real estate agency in Ibiza, we hope that this article has been of some assistance. If you have any further questions, please do not hesitate to contact our team, we remain at your complete disposal.


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