Taxes are incurred when purchasing property on Ibiza. As of January 2013, when purchasing existing properties with a sales value of up to € 400,000 a land transfer tax of 8% is due. For values of €400,000.01 to €600,000, 9% become due, and for properties valued above € 600,000 the tax rate is 10%.
When purchasing a newly-built property (first-time occupation), a reduced sales tax of 10% is charged. Furthermore, 1.2% documentation tax (actos jurídicos documentados) is due.
For a long time, there was an unseemly practice on Ibiza of entering a lower value than the sales value in the land register in order to save on taxes. However, this is not only illegal, but also brings unfortunate effects when the property is sold again. In this case, a profit tax of 24.75% on the difference between purchase and sale value becomes due. That means the lower value entered in the land register becomes detrimental.
Here are 10 rules of thumb to follow:
- When purchasing building lots, always ensure that they fulfill the minimum size requirement for construction, as well as following the according building laws. It is recommended to have the seller provide a confirmation of construction registration for the site (Certificado de Calificación Urbanística, issued by the commune).
- There are many competitors who will make you empty promises. You should make sure every agreement is made in writing, to be on the safe side in case you must go to court. Be sure to include even self-evident topics or promises in written agreements.
- As a buyer, you should request the seller's proof of ownership, for example a notarised purchase contract, and ALWAYS a recent excerpt of the land register and tax assessment.
- Before the notary appointment, request a copy of the contract draft and have it translated into your native language. This way, you will know exactly what it is you're signing. This investment will spare you unpleasant surprises in the future. After you buy, you should immediately request a notarised copy of the purchase contract, and make sure the entry in the land register is made immediately.
- If you need further assistance, you should consult a professional. This step will save you the costs and hassle of making a bad buy.
- Try to avoid so-called “form agreements”, since these only give advantages to your contractual partner. Instead, you should agree on a contract which is precisely tailored to fit both parties' needs and requirements.
- Another important point for both parties is determining which jurisdiction is responsible for the contract. Be sure to discuss this ahead of time with your contractual partner in order to avoid misunderstandings.
- Don't agree on any topics orally or in writing before informing yourself about the condition and quality of the property. Ask the following questions:
- Are there any liabilities on the property?
- Is the property burdened with tax debts, and who is liable for them?
- How is the quality and condition of the property assessed?
- Are there any shared-cost apportionments built up?
- Is the property (currently) rented or leased?
- Are there any construction plans being made by the local municipality?
- When making larger investments, you should always think about your own security first. Be sure to hedge against the contractual partner in writing to avoid collateral damages. In Spain, property is always sold free of encumbrances. You and the notary should ensure that is is also the case in your purchase.
We sell your Ibiza property
Contact us to find out whether we can sell your property quickly.
We don't hold onto real estate, but focus on selling actively.
We will refund your flight costs
Our unique offer to you: We will refund airfare to Ibiza for 2 persons to the notary appointment
for any property purchased through us. Guaranteed and worldwide, in economy class.