Properties In Ibiza

Planning your budget

It is important to budget for everything so that you don't encounter any nasty surprises along the way.

As a guide you should budget for the combined total of these amounts to be around 10% to12% of the purchase price.

When purchasing property in Spain you are required to pay:

Value Added Tax, ( IVA ) of 7% on all new properties, or a Transfer tax ( ITP ) of 7% on resale properties. Either way, new or resale, the tax is 7%.

Solicitor's Fees, generaly they will charge 1½%, although this could be more if the transaction is not straight forward. Alternatively, you may use the services of a Gestoría. A gestoría is a private agency that draws upon the in-house services of accountants and solicitors and deals with all the beaurocratic government departments (that are all too common in Spain) on behalf of ordinary members of the public. A gestoría will normally charge around ½%.

Should you not wish to make a journey to Ibiza on the day of completion, then you may wish to grant a Power Of Attorney so that your solicitor (or someone else acting on you behalf) can sign the necessary documents and make the necessary payments from your bank account. This will incur an extra fee, but you will probably save more than this on flights and hotel bills.

Notary's Fees, the Notary who will check that all the documents are in order, that the parties to the contract are who they say they are, and who will witness the signing of the contract. The fee for this will be about 1% (which will include the 0.5% Stamp Duty), but will be higher if there is a new mortgage to be registered at the same time. The Notary cannot give you, and is not allowed to give you, advice; any questions you may have should be directed towards your solicitor who is there for that purpose.

Plus Valia, You will normally be expected to pay the Plus Valia. (This is a capital gains tax levied by the local town hall and will vary upon the locality and on how long ago the land was previously sold). A typical amount would be 400 euros, although if you are buying a resale property that has been owned by a family for many years, this could be significantly higher. In theory, this tax is the responsibility of the seller of the property. However, because non-payment of this tax results in a charge being placed by the state upon the property (which the new owner would then have to clear), it is now the acceptable norm for the payment of this tax to be (quite legally) contracted to the buyer so that the buyer will know the status of this payment on conclusion of the purchase. In the event that the seller is offering to pay this tax, your solicitor may advise you that you should pay this instead and request that the price of the property be reduced by the same amount.

Connection to Utilities, You should allow 150 euros each for the connection charges for the water and electricity. Occasionally, if there is a lot of work required in order to achieve connection, then the cost could be closer to 300 euros each.