Since the Real Estate sector of the Balearic Islands and based on the data with which is closed by 2015, it is expected that 2016 will be the year of stabilization in the market thanks to the new boom in housing construction and sustained increase in sales.

Similarly, 2016 begins with improvements in the housing sector such as increasing the number of mortgage loans and the housing price index in the third quarter of 2015, has experienced its biggest rally since 2007. Therefore, we echo the the recommendations to invest successfully in 2016 referred from the General Council of Associations of Real Estate Property Agents of Spain.

One of the main premises is to act slowly but surely, making a well-considered investment having clear ideas and valuing aspects such as the fact that according to the National Institute of Statistics, the price of housing has rebounded 4.5% the third quarter of 2015, and the revaluations trend will continue in 2016. Investment in residential housing is usually more profitable than investing in commercial property. The value of investment property changes depending on the location and extent of the land also should take into account that a larger and future exclusive property will generate more profits.

It’s essential to choose a good area with revaluation prospects. The location of housing is the key factor, it’s important to assess the expectations of rental or sale in the area, depending on whether the investment is long or short term. It is very important to consider aspects such as the number of bedrooms, the availability of lift and garage, the old housing, overall, guidance or sunlight it receives and if the area is quiet or noisy. A house in good condition, fully equipped and with good lighting is much more likely to be rented or sold.

Undoubtedly, as the financing is concerned, we are in an excellent time to get a mortgage loan on favorable terms due to low interest rates and mortgage unleashed war. Even so, it is essential to negotiate to get the best mortgage of the market. Prior to the signing of the purchase, it is advisable to go to the Land Registry in order to gather detailed information on housing as the ability to have outstanding charges and if these are reflected in the contract. Similarly, you can get information about mortgages from the housing responsive; if it is subject to foreclosures or affected by any litigious situation or any procedures under way for urban irregularity.

From Ripoll Mateu Solicitors Mallorca we also advice to check that the seller has no outstanding payments with the community and learn in advance about the costs of the community and the amount of property tax. Also, we remember that the buyer is entitled to review the contract of sale and, especially, the mortgage loan, a few days before signing.

If you are interested in investing in property in Mallorca please contact Ripoll & Mateu Solicitors, with offices in Palma and Pollença, we specialize in real estate law and work with the best banks and real estate on the island, we will be pleased to advise you.

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Last October, the Balearic Islands Government announced a general tax increase, which has been materialized with the arrival of the new year in the budgets of the CAIB.

This represent an increase of 65% in revenues from Inheritance and Donations Tax, 45% Tax Heritage and 18.16% for Property Transfer Tax. At be repealed regional deduction which determines the maximum tax of 1% on the tax base, taxpayers duties in Baleares, groups I and II (spouse, parents and descendants ….) Will be increased during the year 2016, taxation of this tax from the € 700,000 per taxpayer.

Although the effect of certain tax benefits that affect both inheritance taxation as corresponding to donations, especially of the aforementioned groups is maintained. At the time of calculating the cost of the tax benefits there are two groups:

– For Groups I and II benefits. In each group there are, on the one hand, tax benefits affecting reductions and, on the other, those who pose a deduction in the amount of the tax, among which the deduction of the fee for group II (children, descendants and spouses), which in practice means limiting the taxation of inheritances to 1% and 7% donations for these families. Although the taxation of inheritance is modified when the estate exceeds the amount of 700,000 euros, the reduced tax rate of 1% is maintained, and also regarding the tax base for inheritance do not exceed this limit.

– For the groups III and IV benefits. Several tax benefits are included, as reduced by transfer of an undertaking, the reduction transmission residence and bonuses on sales of goods in exchange for food.

Progressive table of inheritance tax for people between group I and II (children, parents, spouses):

Taxable income from (€) Gross tax (€) Rest tax base up (€) Applicable type
0 0 700.000 1%
700.000 7.000 300.000 8%
1.000.000 31.000 1.000.000 11%
2.000.000 141.000 1.000.000 15%
3.000.000 291.000 And more
20%

As the Wealth Tax is concerned, the minimum exempt from 800,000 down to 700,000 euros, increasing the fee based on the table that we show below:

Taxable income from (€) Gross tax (€) Rest tax base up (€) Applicable type
0,00 €
0 €
170.472,04 € 0,28
170.472,04 €    477,32 €
170.465,00 €
0,41
340.937,04 €
1.176,23 €
340.932,71 € 0,69
681.869,75 € 3.528,67 € 654.869,76 € 1,24
1.336.739,51 € 11.649,06 € 1.390.739,49 € 1,79
2.727.479,00 € 36.543,30 € 2.727.479 € 2,35
5.454.958,00 €
100.639,06 €
5.454.957,99 €
2,90
10.909.915,99 €
258.832,84 €
And more 3,45

Finally, in reference to the Capital Transfers and Documented Legal Acts Tax, a new applicable rate is established from the time when the value of the property exceeds 1,000,000 euros, then taxed at 11%.

If you need more information or advice on the recent changes in the tax, please contact Ripoll Mateu Solicitors Mallorca. We are at your disposal through our new website  or at our offices in Palma and Pollença.

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