What is the cost of buying a property in Ibiza?
Let’s assume you are looking to buy a property in Ibiza. The average time taken from an initial discussion, to actually taking the keys to your new property in Ibiza is two years! Yes, people take that long to find just the right home here.
However, we find that many buyers get caught up in the romance of the purchase only to discover that the cost of buying a property in Ibiza is a little more than they were expecting. Consequently, some people decide not to go ahead even though they have been looking for a home here for years.
We hope you find the following helpful. If you need to know more detail, we are very happy to help with cost estimates, lawyer quotations or even put you in touch with a local mortgage specialist.
The first thing to mention is that you should calculate 12% of the purchase price, then set aside this extra amount as a rough guide for the total costs that you will be asked to pay. Here’s a quick estimate of what makes up that 12%:
Property Transfer Tax (ITP) – Impuesto sobre Transmisiones Patrimoniales
This is the largest single cost element in a property purchse on Ibiza. When buying a property from a private individual, you pay ITP tax (starting at 8%). Impuesto sobre Transmisiones Patrimoniales (ITP) is similar to UK Stamp Duty and only applied to the purchase of second-hand properties.
Local property taxes (IBI) – Impuesto sobre Bienes Inmuebles
This is a local tax paid to the local Council. The Town Hall (Ayuntamiento) raises a bill based on the rental value of the property (Valor Castral). It’s payable, once the property is registered in your name. It doesn’t usually amount to very much.
If you decide to take a local mortgage, you will need to pay for a valuation. This is usually about €500 but it’s based on the property value and can vary from bank to bank. Lenders usually charge around 1% of the loan value as their arrangement fee. However, savings can be made here by using a good mortgage broker.
We strongly suggest that you use a local (Balearic based) lawyer. They have the experience to deal with some “very local” Ibiza ways of dealing with property buying here. Expect to pay up to 1% of the purchase price. You can fix the cost by agreeing a fixed fee up front. You usually pay the lawyers on the day that you complete the purchase.
You are required to use a Notary even though you are using a lawyer. They are impartial and ensure that the transaction is all in place and then recorded correctly. It’s worth getting your lawyer to confirm the Notary Fee early on, as they can vary from 0.5% to 1%.
Once you’ve bought your Ibiza property, you will need to pay to have it registered in your name. To get this done, expect to pay around 1% of the price declared on the Deed of Sale.
Expenses related to inscribing the sale with the land registry are almost always paid for by the buyer and are calculated in relation to the purchase price declared on the deeds of sale – generally around 1%.
On the day of completion, you will need to have cleared funds in place. Some people transfer funds direct to the Notary account in readiness.
If you decide to present a Bankers Draft Cheque, then there will be a small cost to be paid to your local bank. You can set up a local bank account for free usually. However, don’t forget, if you are exchanging currency to buy your home, the cost to exchange and transfer will likely be around 2 – 2.75% of the funds exchanged.
In Ibiza, it is normal that the seller pays the fees to the Estate Agent for selling the property. Check when you make an offer.
For information on MORTGAGES in Ibiza and using a PROPERTY LAWYER, please visit our services information