9 Things You Should Know Before Buying a Home in Mallorca
Whether you're looking for a private getaway, a permanent home, or a new source of revenue, buying a home in Mallorca may be the best decision. Mallorca is a beautiful beach town full of wonder and beauty. It's a popular tourist destination that hasn't been so commercialized that it's lost its authenticity.
There is a historical district, museums, beaches, walking trails, and much more to discover in Mallorca. There are also a ton of hobbies and activities to explore. If you've always dreamed of buying a home in Spain, you definitely need to look into Mallorca.
But what do you need to know about purchasing a property in this one-of-a-kind town? Are there any restrictions based on citizenship? What costs are involved?
Keep reading for everything you need to know.
1. Beach Properties Retain Their Value
Investing in beachfront or beach town properties is nearly always a wise decision. Because of the alluring nature of these properties (especially those with amazing views), people will always be willing to pay top dollar for them.
Towns like Mallorca attract people from around the world because they create a relaxing and luxurious escape. As long as people continue to enjoy beach towns, property values in Mallorca will remain steady. Most likely, you'll see an increase in the value of your property after just a few years.
This can be an important factor for those who want to flip homes or aren't sure they'll want to own the property for more than a few years. Buyers may want to ask, "What are the risks of buying a short sale home?", if they're looking to get a great deal on a home that's headed toward foreclosure.
2. Mallorca Vacation Homes Are a Great Source of Revenue
What are millennials looking for when buying a home?
One of the most common reasons people like the idea of buying a property in Mallorca is because of the potential income possibilities. As suggested above, some people buy homes in less-than-ideal conditions so they can acquire homes with potential inexpensively. They spend a few months fixing them up and then resell them for a much higher value.
Alternatively, some people consider buying a home in Mallorca and renting out the property to vacationers and tourists. Mallorca homeowners can make thousands of Euros a week by renting out their high-end homes.
3. There Are Multiple Styles of Homes to Choose From
There are three major types of homes in Mallorca: seaside villas, apartments, and townhouses. However, there are also country houses further inland. You're not limited when buying a home in this town.
What type of home you decide to buy will fall primarily on what you intend to use it for. Apartments and condos often have community swimming pools and other amenities and can be found everywhere throughout Mallorca.
Townhouses can also be found throughout Mallorca and typically offer close proximity to shopping, dining, and other interests. Seaside villas are, of course, beachfront properties that hold the most appeal for tourists and vacationers. However, these properties will also be the most expensive.
4. Estate Agents Can Be Essential
Estate agents in Spain often require a three per cent commission. However, they can be vital for finding the right property, adhering to the legalities of purchasing a home, and not getting taken advantage of. They are especially important for foreigners looking at buying a home in Spain.
5. There Are No Restrictions for Foreigners Buying Property in Spain
Many countries have a lot of red tape to navigate around for foreigners looking to buy property. Spain, however, is pretty laid back about homeownership, regardless of your home country.
Any foreigner can buy a home in Spain. They just need a financial number which they can obtain using their passport at the local police station. Foreign property owners are also granted residency visas.
6. Sellers Are Responsible for Property Defects
One of the best things about buying a home in Mallorca is that you don't have to worry about hidden damages or issues. If any come up, the seller is held accountable for repairs and costs. Keep in mind that there may be some difficulty in getting the past owner to make amends.
7. Buyers and Sellers Pay Different Fees
You may be wondering, "What are the upfront costs of buying a home in Mallorca?" There's more to it than just signing paperwork and paying your mortgage payments.
In Spain, the buyer and seller are each responsible for certain fees. For example, the buyer pays legal fees, notary fees, and property transfer taxes. The seller, on the other hand, usually only pays the estate agent fees.
8. Typical Spain Home Purchases Require a Downpayment
There are prepaid costs when buying a home in Mallorca not previously mentioned. For example, most estate purchases require a 10% downpayment or deposit. However, if you're having trouble coming up with the money and still own your old house, consider getting a bridge loan.
If you're wondering, "How does a bridge loan work when buying a home?", it's actually pretty simple. Using your current home as collateral, you can borrow enough money to cover the downpayment. However, this means being approved for the bridge loan and both mortgages until your old house sells.
9. Spain Has a Capital Gains Tax
Finally, you need to be aware that Spain has a capital gains tax like other places in Europe and in America. This is important if you're planning on flipping the home for profit or reselling it anytime in the future. Capital gains tax is applied regardless of how long you've lived in the home.
The capital gain tax is based on the difference between your purchase price and what you sell the home for.
A profit of 6,000 or fewer euros accrues a 19% taxation. A profit of 6,000 to 50,000 euros has a 21% tax. Any profit of over 50,000 euros carries a 23% tax.
Want More Advice on Buying a Home?
Surprisingly, buying a home in Mallorca isn't as complicated as you might think, even for foreigners. If you're looking to make a great investment for a retirement home or for earning an extra income, you can't go wrong investing in property in Spain.
Be sure to check out some of our other articles for more information. Contact us if you're ready to commit to buying a property in Mallorca. We would love to be a part of your process and help you make the best decision.