IMPORTANT FACTORS TO BEAR IN MIND AND COMMON PITFALLS WHEN BUYING PROPERTY IN IBIZA

Buying a home in Ibiza does not have to be that complicated - as long as you are aware of a few important things, and are surrounded by a professional team from start to finish and beyond.. Already after an initial meeting, our customers tend to feel more secure about what is required to make a purchase. We are with our customers all the way - from the first viewings until you have the keys to your new dream home. We have extensive experience in the real estate market and collaborate with our experts in finance, mortgage and currency transfers, lawyers, architects, construction companies and ongoing maintenance.

If you have any questions now you can contact us on +34 646 834 035 / +34 608 001 607 or ibiza@fantasticfrank.com.

3 QUICK TIPS WHEN BUYING A HOUSE OR APARTMENT IN IBIZA

1. In Ibiza there are more so-called brokers than properties for sale. Stick to one broker that you trust - then you will get the best help. Look at several properties and be open to suggestions from the broker who knows the market. We know all the good brokers here, as well as the ones to avoid.

2. Have the funding ready before you start looking so you can move quickly when you find the right property. We like to help whenever we can on this important factor.

3. If it feels right then don't hesitate, a chance will rarely come back. Also, get help from a lawyer for a safe and secure deal, and get the lawyer lined up in advance as well, so you can move quickly if needed. Sellers will take you more seriously if you are already fully prepared to go forward with an offer.

5 PITFALLS WHEN BUYING A HOUSE OR APARTMENT IN IBIZA

Illegal alterations
Illegal extensions and alterations of both houses and apartments can cause major problems. The fines for future owners can be high and parts of the property may need to be demolished before further renovations can take place. Your broker and lawyer will help you with this.

Incorrect information in the ad
Not always sure that advertised information matches reality? Very often there can be discrepancies about the total square meters and for example, whether the terrace is included or not. Make sure where possible the title documents have already been checked. Your broker will help you with this.

Necessary Certificates
Ensure that all documentation on the property is in place. For example, often a Certificate of Habitability will be required (Cedula de Habitabilidad) and you cannot, for example, connect electricity, gas and water, without. Your broker will help you with this.

Building permits
Just because the neighbour has built a terrace, does not necessarily mean that you could do the same, or even that your neighbour could! Investigate what can be done specifically on the property you are interested in. Your broker will help you with this.

No agreement without a lawyer!
Do not sign a contract or do not pay any down payment without a lawyer, the risk is that you will get locked up into a deal you will regret. Your broker will help you with this.

HOW DO I GO ABOUT BUYING PROPERTY IN IBIZA?

1. PREPARATIONS

Where on the island should I look?
Ibiza is a relatively small island but with a lot to offer and with a fantastic variety between different areas and villages. Find your favorite area by traveling and discovering. We have lived in Ibiza a very long time between us and we are happy to share our hidden gems and favorites to guide you in the right direction.

How do I best finance my purchase of a property in Ibiza?
We always recommend that you investigate the possibility of a loan in your home country, it is often the easiest and provides the best conditions. Then you are also ready to move quickly when the dream home shows up. If you prefer to finance the property here, we can help with very experienced mortgage brokers, and great Spanish bank contacts.

2. THE BUYING PROCESS

What is an option contract, and when is it done?
Once you find the right property, your broker will negotiate the best terms for the purchase. Thereafter, an option contract is signed and a down payment of about 10% is paid. Since the same property is often for sale by several brokers, the option contract serves to reserve the property and gives time for the legal and financial aspects that need to be done.

In addition to the price and what is included (eg furniture), the contract regulates the entry date, which is usually 4-6 weeks away. Obviously there is the risk of not going ahead with the purchase, but then the buyer loses his paid down payment and if the seller does the same, the down payment is paid back plus a penalty fee which usually corresponds to the same amount as the down payment.

As a buyer, you must instruct a lawyer to assist and advise on this from the outset.. For the signing of the option contract, nothing special needs to be prepared by the buyer, but before the completion date you need to have acquired your NIE (ID) number, your financing and opened an account number in a Spanish bank.

Buyers responsibility to check (Caveat Emptor)
Properties in Spain are sold in existing condition and it is up to the buyer to ensure that there are no surprises after the entry. Among other things, the lawyer looks over the legal aspects, whether the property is mortgaged, what is registered in the property register and what the ownership conditions look like. When it comes to houses or larger properties, the buyer sometimes also takes the help of a technical architect to check the condition and if there are illegal extensions or alterations made.

How do I get a NIE number?
In order to own a home in Spain, you need a Spanish tax identification number, a so-called NIE number. Only then can you open a bank account and sign the purchase letter. You can apply for NIE number with the Spanish police or via the Spanish embassy in your home country. The application is usually made through the lawyer.

Do I really need a lawyer?
In a word, yes! It is not worth taking the risk without one.

What happens on the completion date?
On the day of completion, the deal is settled with a Notary Public. The day before, normally an inspection of the property is done together with the seller to ensure that everything is in working order and left as previously agreed. At the notary, a transfer deed is signed, the remaining payment is done and the keys are handed over.

The notary registers the purchase in the property register and after about three months the buyers receive the legal deed where they are registered as the new owners of the property. Both buyers and sellers can be represented by someone who has a power of attorney should they not be able to travel to attend the signing.

Notary
Notary Publicus is an officially appointed lawyer who has the task of checking the identity of the parties, the debts of the home and that the payment to the seller is correct and made according to Spanish law. The notary also draws up the letter of purchase which is the basis for your application of the purchase deed. The notary never checks the condition of the home or any illegal alterations or extensions.

3. FEES AND TAXES

What taxes and fees should I count on the purchase?
Your lawyer can calculate the exact costs but allow about 10-13% of the purchase price for taxes and fees that apply.

Transfer Tax: For resale properties that are sold, ie not new builds, the tax is 8-11%. This is calculated incrementally, 8% up to €400 000, 9% for values between €400 000 and €600 000 10% up to €1 000 000 and 11% for over this price.

For newly built properties, VAT of 10% is payable. VAT on land, commercial properties and parking spaces is up to 21%.

Notary fees: The notary charges both a fixed and a variable fee, based on the property's valuation. When the notary sends the purchase letter for registration to the local property register, a stamp tax is levied. Expect to pay about 1% of the price for notary costs and stamp duty to the property register.

Legal fees: Allocate about 1% of the purchase value for legal fees.

Wealth tax: In Ibiza the wealth tax ranges from 0.28% - 3.45% of the asset value. A €700 000 tax-free allowance applies for everyone, and Spanish residents get up to an extra €300 000 against their main home. For resident married couples who jointly own property, this could mean a total allowance of €2 million. We advise you to seek specialist advice on this matter, and normally your lawyer should be able to advise.

What annual taxes and fees should I expect?
The property tax, IBI, varies between 0.4% and 1.1% depending on the area and is calculated on the appraisal value. For apartments it is common with an annual IBI of 200-300 euros and for houses 1000 euros and above.

The tax for waste disposal is about 200 euros per year, depending on the municipality.

Running costs to count with are electricity, gas, water, internet and community fees. We usually have information from the current owner on the costs for the particular property you are interested in. Expect about € 300-400 per month for an apartment for running costs.

Property owners in Spain must declare their holdings and for those who are not resident in Spain, a tax representative is required by law. We can recommend several tax representatives who can handle tax returns, payment of property taxes and assist in simpler legal and tax matters.

If you have any questions now you can contact us on +34 646 834 035 / +34 608 001 607 or ibiza@fantasticfrank.com.

Also look at what we currently have for sale in Ibiza.