Fact Sheet – Buying on Ibiza

The steps to buying a property on Ibiza

Stage 1: Offer and Holding Deposit

The first step when you find a property that you want to buy is to enter into negotiations with
the owner regarding the price and terms and conditions of sale. This is a non binding process.

We always advise our clients to use a solicitor for the purchase and can recommend several
solicitors in Ibiza that speak English.

Upon your offer being accepted the first stage is normally to put down a holding or reserve
deposit to take the property off the market. The amount of the deposit varies from property to
property depending on the price. The reserve agreement will normally be subject to legal
checks being carried out and will set a time within which the pre-sale agreement should be
signed.

Stage 2: The pre-agreement – Contrato privado de compraventa

Unless you are paying in full and in cash immediately, you will need to enter into a Contrato
privado de compraventa (essentially a preliminary sales contract).

This is normally a simple agreement in which the Seller agrees to sell the property, and the
Buyer agrees to buy the property at the price agreed. This will contain all of the relevant
details such as a description of the property, purchase price, and date of completion. At this
stage you will be expected to pay a deposit to the seller, this is normally 10% of the agreed
purchase price but this amount can vary.

Included within this contract there is normally an arras clause. Should the seller decide to
withdraw from the sale you are entitled to twice their deposit as compensation. Should you
decide to withdraw your deposit is usually lost.

Of course, the buyer and seller may choose another type of agreement if they prefer.

Prior to entering the contract, the following checks will need to be carried out:

(a) Check on planning status and that the property has all necessary permissions. In
some cases it may be necessary to involve an architect at this stage.

(b) Check on title and whether the property is being sold free of debt. If there is a
mortgage over the property it will be discharged at the same time as you sign the final
contract

Lucas Fox Ibiza (Part of Lucas Trading SL), Marina Botafoch, 07800 Ibiza. CIF: B 64125438
T: +34 971 590 630 / E: info@lucasfox.com
www.lucasfox.com
Stage 3: Final Contract - Escritura de compraventa

On the completion date the balance of the purchase price (sales price minus deposit) and any
fees payable by the buyer must be paid.

The seller and buyer then sign the Escritura de compraventa contract, which is equivalent to
the title deeds of the property.

The buyer is then issued with the public deed of conveyance (escritura) in front of a Notary
Public, who certifies the transfer, and a copy will be passed to the tax office and on to the
property registry.

The Notary Public in Spain is a public official who will be required to witness the deed of sale,
however expert, independent legal advice should be taken to protect your own interests.

Costs related to buying in Spain

The costs related to buying on Ibiza are typically between 9% and 10% of the purchase
price:
Solicitor’s fees – normally a fixed fee. The fee can vary due to the amount of work
required to be done by the solicitor.
Notary's fees and land registry fees – Depends on the complexity of the deed. Normally
between €1000 and €2000 euros.
Transfer Tax - The buyer is required to pay 8% of the purchase price in property transfer
tax. When buying new build houses the buyer pays 8% VAT instead of the 8% transfer tax.
When buying a building plot from a developer the VAT will be 18%
Stamp Duty – 1% This only applies to new build properties, not to re-sales

General Running Costs:

Local Taxes – IBI - Payable annually. Calculated on the rateable value (catastral) of the land
assigned by the Spanish Tax Office. It is advisable to ascertain annual local rates for a
property before purchase as this differs from town hall to town hall.

Non resident income tax (IRNR) You pay this version of income tax in Spain if the following
conditions apply: 1) You do not reside in Spain, 2) You own property in Spain, 3) The property
is exclusively for personal use and you do not rent it out, 4) You have no other source of
taxable income in Spain. Although you do not earn an income from the property, in the eyes
of the Spanish tax authorities you still derive a benefit from owning a property in Spain and
therefore have to pay an imputed income tax. The tax base for IRNR is 2% of the cadastral
value of the property, or 1.1% if the cadastral value has been revised since 1st January 1994.
Tax rate: 24% (25% for 2006 and before). Tax payable annually. The cadastral value of the
property is much lower than the actual value. This tax normally equates to approximately
0.2% of the property value.

Lucas Fox Ibiza (Part of Lucas Trading SL), Marina Botafoch, 07800 Ibiza. CIF: B 64125438
T: +34 971 590 630 / E: info@lucasfox.com
www.lucasfox.com