How to buy a property in Ibiza?

Welcome to the step-by-step guide for property buyers in Ibiza

With this article we want to provide you with the most complete information possible and prepare you for the process of purchasing a home on the island.

Whether you’ve done it before or not, it’s always a challenge to buy a property. For that reason, the more informed you are about the process beforehand, the more relaxing it is and the most likely you are to get the property you want, in turn reducing unforeseen expenses and setbacks.

With more than 30 years of experience in the Ibiza real estate market, we have assisted hundreds of clients in purchase and sale operations of properties of all types. Based on our experience and the doubts that our clients usually have, we have created this complete guide to resolve common questions and begin the search process as best prepared as possible.

This guide is quite long, ordered by the different phases of the purchasing process. You can jump directly to a section or point by clicking on the link in the table of contents.

Table of contents:

A. INFORMATION BEFOREHAND

A1. Taxes and costs

Which taxes and fees do you pay when buying property in Ibiza?

First of all, let’s get an idea and understand the costs and taxes of buying a property in Ibiza. Among them we have fixed or essential costs, such as taxes, and others that are variable and depend on the circumstances.

A summary of the taxes and costs when buying a property in Ibiza:

• Property Transfer Tax (ITP)

• Value Added Tax (IVA)

• Legal costs (lawyers)

• Mortgage fees and appraisal expenses

• Notary and Property Registry Fees

• Processing fees (gestoría)

• Banking expenses

When purchasing property in Ibiza, it is important to take into account the various tax implications. The Value Added Tax (VAT) is applied to land, commercial premises, garages and any type of newly built property, while the Property Transfer Tax (ITP) is paid on the rest of the properties for residential use. Let’s start with this last one, since it is the most common case on the island:

Let’s start with the latter, since it is the most frequent case:

The Property Transfer Tax (ITP)

This tax is levied on second-hand properties and is calculated as a percentage of the purchase price.

The tax must be paid at the Tax Office of the municipality where the property is located within one month from the date of granting the title of the property. In the Balearic Islands, the tax rate ranges between 8% and 13% depending on the value of the property being transferred.

Here are the updated percentages*:

• Up to €400,000 (8%)

• €400,000 – €599,999 (9%)

• €600,000 – €999,999 (10%)

• €1,000,000 – €1,999,999 (12%)

• More than €2,000,000 (13%)

* Data updated on 8.2024. Source: Tax Agency of the Balearic Islands

The ITP tax is cumulative, so the first €400,000 is taxed at 8%, and the rest that exceeds that amount will be charged at the percentage corresponding to its bracket.

Value Added Tax (IVA) and Stamp Duty (AJD)

When it comes to the purchase of a newly built home as the first occupancy transferred by the promoter or builder, the Property Transfer Tax (ITP) does not apply. Instead, the buyer must pay two other taxes: Value Added Tax (VAT) and Documented Legal Acts (Stamp Tax or AJD).

1. Value Added Tax (IVA/VAT)

The VAT is paid by the buyer (together with the purchase price) to the seller and the seller must transfer the VAT directly to the Tax Agency.

• 10% for homes.

• 21% for land, commercial premises, storage rooms and garages.

2. Stamp tax (“Documented Legal Acts Tax” or AJD)

When the purchase of a property is subject to VAT, the buyer must additionally pay the Stamp Tax or AJD (Documented Legal Acts), of 1.2% less than or equal to €270.151,20 or 1.5% of the total purchase value less than €1,000,000 and 2% above this figure*, and must be paid within one calendar month from the day the property title is signed through the self-assessment procedure.

Legal costs (lawyers)

Involving legal professionals during the property acquisition process is essential to ensure a smooth transaction and protect your interests. Legal costs typically include hiring an experienced attorney who specializes in real estate law. These legal experts will guide you through every step of the process, ensuring that all necessary paperwork is completed accurately and advising you on any legal implications related to your purchase. Lawyers established in Ibiza normally charge 1% of the property sales price.

Mortgage fees and appraisal expenses

If you require financing for the purchase of your property, it is essential to consider the additional expenses associated with mortgages. These costs often include property appraisal fees, which determine the market value of the property and help the lender evaluate its suitability as collateral. While these fees vary depending on the complexity and value of the property, it is essential to budget for this expense during the purchase.

The expenses surrounding the appraisal required by the credit institution are an official property evaluation document carried out by a surveyor or architect selected by the lender. Depending on the value and size of the property, the price can vary between €400 and €3000.

The mortgage loan in Spain may have an opening fee to contract it, but it varies depending on the bank, if at all. If this extra cost exists, it would be between 0.5-3% of the total amount of the loan.

Notary and Property Registry Fees

To finalize a property transfer, you will need to hire a notary public who will oversee the legal aspects of the transaction. The notary is responsible for preparing the official deed, verifying its legal accuracy, and ensuring that it is signed correctly. Notary fees are generally calculated based on the purchase price of the property. Additionally, there are property registration fees that cover the cost of registering your property with the appropriate authorities. These fees vary depending on factors such as property value and location and whether you have a mortgage, but typically are no more than 0.2% of the purchase price.

Processing Fees (Gestoría)

A gestoría is a management company and an administrative agency that helps in managing procedures and administrative tasks related to the purchase of your property. Hiring an accredited agency can simplify bureaucratic processes, ensuring compliance with all legal requirements and saving you time and effort. The fees charged by the agencies may vary according to the services provided, depending on the complexity of the process involved.

Banking expenses

They vary depending on the bank and the payment method. Mostly these are costs for bank transfer, foreign currency exchange, opening a bank account, etc. We recommend that you take the time to study the payment methods, especially when it comes to large amounts, since you can save unnecessary costs imposed by banks and/or savings banks.

Summary of taxes and expenses of buying a property in Ibiza:

–Taxes: ITP 8-13% or 10% of VAT plus 1.5-2% stamp duty (AJD)

–Mortgage expenses: interest (0,5-3%) + appraisal costs

–Legal costs: It may vary, but approx. 1%

–Notary and Property Registry Fees: range between 0.1% and 0.5%.

–Processing agency fees: depending on services required (variant)

–Banking charges: depending on payment method (variant)

A2. Necessary documents

Which documentation is needed to buy a property in Ibiza?

Before signing the property title:

The personal documents required for signature before a notary are the following:

• The original DNI or passport

• A personal NIE number (if you are a foreigner)

The NIE is the identity number of foreign residents who carry out an economic activity in Spain. The NIE must be presented before a notary and is necessary to pay taxes. The processing period to obtain a NIE usually takes no more than a month. Your gestoría or lawyer can assist you with this process; or visit this page for further guidance on the process of obtaining a NIE and this page for information for UK citizens.

• If the buyer is a Spanish company, it must present the CIF number. If the company is foreign, it must obtain a Spanish tax identification number.

• A Spanish bank check or proof of bank transfer, depending on the payment conditions agreed between the parties. Foreigners who buy for the first time in Spain must open an account in a national bank, which after the purchase is used to direct debit the costs of telephone, electricity, etc.

• A receipt or proof from the bank of any transfer or payment made for signature before a notary. These proofs are necessary to comply with the requirements of the origin of the funds.

To sign the property title:

• Private purchase and sale contract or deposit contract: The private or deposit contract is a document that describes the terms and conditions agreed upon between the buyer and the seller. Include details about the property, purchase price, payment schedule, and any additional clauses or agreements. This contract can be prepared by a qualified attorney or gestoria.

• Deed of sale: Once all the legalities are completed, the property deed is signed before a notary public. This document officially transfers ownership from the seller to the buyer. The deed includes detailed information about the property, including boundaries, specifications, and any liens, if applicable.

* Buying a house in Ibiza requires careful preparation and compilation of the necessary documentation. We recommend that buyers prepare the documentation and means of payment well in advance, so that the purchase of the property is successful and without setbacks. If specific questions arise, you can consult your real estate agent or attorney.

A3. Mortgage / secure funding

¿Qué papel juega la hipoteca en la compra de una propiedad en Ibiza?

Get Pre-approved

It’s important to get pre-approved as it not only gives you clarity on how much you can pay, but it also shows sellers that you are a serious and qualified buyer.

Understand pre-approval.

Pre-approval is essentially an evaluation of your financial situation by the bank to determine how much they are willing to lend you. It involves submitting necessary documentation, such as income verification, credit history, and employment details. Please note that pre-approval is different from pre-qualification: while pre-qualification provides an estimate based on self-reported information, pre-approval carries more weight as it involves extensive verification.

Benefits of pre-approval:

1. Know your budget: By getting pre-approved, you will have a clear understanding of your budget range. This knowledge allows you to focus on properties within your financial means and avoid wasting time on homes that may be out of your reach.

2. Greater bargaining power: With a pre-approval letter in hand, sellers and real estate agents will consider you a serious buyer. This can give you an advantage in negotiations, especially in a competitive market like Ibiza.

3. Faster Closing Process: Since much of the paperwork and verification has already been completed during the pre-approval stage, the mortgage process will likely move more quickly once you find your dream property.

Finding the right bank for your mortgage

Choosing the right financial institution is essential when it comes to obtaining financing for the purchase of your property. Here are some key considerations to keep in mind:

Search for a Lender

Take the time to research different financial institutions and compare their offers. Look for an entity with experience in offering mortgages for international buyers.

Don’t settle for the first candidate you find. Instead, get quotes from multiple entities to compare the interest rates, fees, and terms they offer. Remember, even a small difference in interest rates can result in substantial savings over the life of the loan.

Understanding mortgage options

There are several mortgage options available, so it is important to understand which one best suits your needs. Some common options include fixed-rate mortgages, adjustable-rate mortgages, adjustable-rate mortgages (ARMs) or “mixed” mortgages, interest-only mortgages, and government-backed loans, such as youth or group mortgages. Here is a reference article that explains various types of mortgages.

Evaluation of interest rates and terms

Interest rates play an important role in your monthly mortgage payments. Compare interest rates offered by different candidates and pay attention to any additional fees or charges that may apply.

If the search seems daunting, consider consulting a mortgage broker. Brokers have connections with multiple banks and can guide you to those that best suit your financial situation and property preferences.

Evaluate customer service

A reputable bank should provide excellent customer service throughout the mortgage process. This includes clear communication, quick responses to queries, and transparency regarding rates and terms.

Search recommendations

Don’t hesitate to look for recommendations from friends or family who have recently bought houses in Ibiza or even your real estate agent. Their first-hand experiences can help you find the best option.

Closing of the mortgage

Once your application is approved, the final step is to close the mortgage. This involves signing the mortgage contract in a public deed before the notary, paying the closing costs and receiving the funds from the bank. It is important to carefully review the mortgage agreement before signing it to make sure you understand all the terms and conditions. Once the agreement is signed and the transaction is completed, you officially become a homeowner.

A4. Market situation and regulatory environment

Ibiza market outlook (2024-25)

The beautiful island of Ibiza has long been recognized as a premier tourist destination, attracting visitors from all over the world. However, beyond its vibrant nightlife and stunning beaches, Ibiza is also an increasingly desirable place to call home. In this property market outlook for 2024-25, we will delve into few of what we consider key points driving valuation trends, like lifestyle, property listing volume, buyer nationalities and the construction regulatory environment in Ibiza, among others.

If you are a prospective homeowner or simply curious about the real estate landscape of this stunning island, join us as we explore why Ibiza remains an object of desire for many.

Ibiza: a tourist destination and a place to live

Ibiza’s popularity as a tourist destination has seen a steady rise for at least 5 decades and has skyrocketed in recent years. Its picturesque landscapes, crystal-clear waters and vibrant culture have captivated travelers seeking relaxation and excitement. However, what sets Ibiza apart is its growing reputation as a great place to live all year round.

The island offers an incredible quality of life with its mild Mediterranean climate, known for its long, sunny days and mild winters. Outside of the peak season, this climate allows residents to enjoy a variety of outdoor activities, from relaxing on the beach to exploring the stunning natural landscapes, but also sees a growing cultural and culinary offering throughout the year.

The island’s unique culture and lifestyle also contribute to its appeal. Ibiza is a melting pot of influences that combines traditional charm with modern cosmopolitan style. Its diverse community welcomes people from all walks of life, creating a vibrant, liberal atmosphere that increases the island’s appeal and creates a unique blend of cultures that enriches daily life.

Quality infrastructure and amenities

Residents can enjoy a relaxed lifestyle while having access to modern amenities such as top-notch healthcare facilities and international schools. Ibiza has an international airport, with direct flights to many destinations throughout the year, and a wide network of roads in good condition. Additionally, the island is home to world-class restaurants, extensive wellness offerings, high-end fashion boutiques and vibrant nightlife venues, providing its residents with a luxurious lifestyle if they so please. Living here becomes comfortable and convenient.

Valuation trends: a steady rise in property prices

An important aspect of the real estate market in Ibiza is the constant increase in property prices. In recent years, demand has consistently exceeded supply due to the limited availability of land on the island. As a result, property values have seen continued growth.

Although price dynamics by themselves can never be considered a compelling argument for making a future forecast, it nevertheless has a certain meaning to observe how this phenomenon has come to take hold in the mind of the international investor and, so to speak, certain types of properties in Ibiza have been elevated to the status of safe or refuge assets, tested by crises such as the great recession of 2008; especially severe in the rest of Spain, while Ibiza property prices remained practically unchanged and simply stopped appreciating for about 2-3 years.

Construction regulatory environment: balance between growth and preservation of limited space

Preserving the natural beauty and cultural heritage of Ibiza is a priority for both local authorities and residents. Consequently, the building regulatory environment is carefully managed to balance growth with sustainable development while protecting the island’s unique ecosystem.

Strict regulations exist to protect Ibiza’s unique landscapes, while also ensuring that new construction aligns with the aesthetic appeal of the island. This commitment to maintaining the charm of the island and enhances the overall appeal of properties in Ibiza.

Limited land supply and strict building regulations contribute to a greater property shortage, creating a unique dynamic where supply struggles to keep pace with demand. With high demand from domestic and international buyers, it can be difficult to find properties in prime locations.

However, this scarcity has created a feeling of exclusivity and appeal around real estate in Ibiza. Furthermore, the reaction of developers to respond to this challenge has been to focus on high-quality projects that maximize space and offer innovative designs.

Although the volume of property listings may not be as extensive as other markets, the focus on quality ensures that buyers can find exceptional options tailored to their preferences.

Nationalities of owners and buyers: an increasingly diverse mix

The Ibiza property market has always attracted a diverse range of nationalities looking for a piece of paradise. In recent years, there has been an increasing influx of international buyers from various parts of the world.

Traditionally dominated by European buyers, especially those from countries such as Germany and the United Kingdom, the Ibiza buyer profile has become more cosmopolitan and diverse over time. In recent decades, we have observed that nationalities such as French, Italian, Belgian, Dutch, Scandinavian, American and even from the east have increased their presence in the island’s real estate market, contributing to further diversifying the proportion of different nationalities of buyers in the island. This diversity not only adds vitality to local communities but also ensures a healthy market with a wide range of perspectives and preferences.

A diverse real estate market: something for everyone

The Ibiza property market offers a wide range of properties to suit various preferences and budgets. From luxurious villas and apartments with stunning views to quaint townhouses in charming villages, there is something for everyone on the island. This diversity makes Ibiza an attractive destination for both permanent residents and investors looking for the holiday home of their dreams.

High rental yield: a lucrative investment

Property in Ibiza also presents a lucrative investment opportunity due to the potential for high rental returns. With one of the most popular tourism markets in the world, owners have the option of renting out their properties to tourists when they are not using them. The high demand for vacation rentals, combined with the luxury status of most properties on the island, can generate significant vacational rental income. We have even seen a growing trend in medium and long-term rental demand aswell, both in season and the rest of the year. Anything that is a rental for less than a month’s stay is considered a vacation rental and a tourist license is required. Properties must meet certain requirements (which we will explain in the next section) and all those that have a current license are considered an extra value to their sale price.

Conclusion

Looking ahead to 2025, Ibiza’s property market presents a tantalizing opportunity for buyers looking for a luxury destination with strong growth potential. Valuation trends in Ibiza continue to indicate rising prices, in the midst of a limited supply with high demand, which has its origin mainly in a increasingly diversified range of nationalities, a history of safe haven and an evolution of balance and sustainable growth. Without a doubt, Ibiza will continue to stand out as an object of desire for those looking to take part in one of the most sought-after places in the Mediterranean.

Vacation Rental License

A lucrative option is to offer your property as a tourist or vacation rental, ranging from a minimum stay of 3 days to a month. With the increasing popularity of short-term rentals, it is crucial to obtain a tourist rental license to ensure that you operate within the regulations set by local authorities.

For years, local authorities have been under pressure due to the problem of the lack and rising prices of housing on the island, therefore they have had to increasingly restrict vacation rentals, which is seen as one of the main causes of the problem and pursue with more means activities of this type that do so without a license. Only advertising properties that operate without a license on tourist offer channels can result in heavy fines and penalties.

A number of properties for sale already have licenses and are of two types: ET and ETV. ET licenses generally allow short-term rentals (up to three months per year), have less strict requirements, and owners can manage their rentals independently or through an agency. ETV licenses, on the other hand, allow for longer rental periods or year-round operations, require stricter regulations, professional management, and often require the property to meet higher standards, including environmental and accessibility commitments.

The following prerequisites must be met to obtain a tourist or holiday rental license in Ibiza:

1. Only independent properties can request them, that is, neither townhouses nor apartments can apply.

2. The property must have a valid certificate of occupancy (occupancy certificate) and must meet certain safety standards outlined by local authorities.

3. The property must be located within a designated tourist area.

4. The Property must not have previously violated vacation rental licensing laws.

5. The property must be at least five years old and have previously been used as a private residence.

6. The property must possess a relevant active energy certificate.

7. Note that inspections will be carried out at a later stage. Any inaccuracies or omissions found during these inspections may result in cancellation of registration and immediate suspension of vacation rental activity.

8. The next change in the Island Territorial Plan (PTI) restricts the number of eligible homes to only 1,000 on the entire island. From then on, only homes built before 1956 that meet specific conditions will qualify. The Plan also mentions the implementation of increased inspections and stricter penalties for renting without a license.

With all this, it is evident that having a valid tourist rental license has a substantial value that must be taken into account, since it allows the property to access the increasingly exclusive vacation rental market in Ibiza; a market that today is considered “luxury” by default and this is well reflected if a price comparison is made, for example, with other similar islands such as Mallorca or Menorca.

A5. Why go with an agent

Why is it a good idea to go with an estate agent in Ibiza?

The property market in Ibiza can often be a challenge without the guidance of a professional. In this section, we will explore the advantages of hiring the services of a competent real estate agent in Ibiza.

Extensive knowledge of the local market

The most obvious reason is that navigating the property market in Ibiza requires a deep understanding of its complexities and trends. A competent real estate agent has extensive knowledge of the local market that goes beyond what can be found through simple online research.

The real professionals in this sector are well versed in the different neighborhoods and areas of the island and can provide valuable information about the characteristics and suitability of each area based on your preferences. They understand which neighborhoods offer proximity to services and infrastructure tailored to their needs and lifestyle. Additionally, they stay up to date with developments that could affect property values and investment potential.

Expert negotiation skills

When it comes to buying property, negotiation skills are vital to getting the best deal. A skilled real estate agent has negotiation skills honed through years of experience in the industry. Understanding the local market dynamics gives them a comprehensive knowledge of property values, allowing them to negotiate on your behalf effectively.

Access to exclusive off-market properties

One of the important benefits of working with a well-established and reputable agent in Ibiza is that you often gain access to exclusive off-market properties. These are properties that are not openly posted online or advertised to the general public. Instead, they are discreetly offered to trusted agents who have established relationships within the local market.

By choosing an experienced and well-connected professional, you open yourself up to a world of hidden gems that would not otherwise be accessible. These off-market properties can often provide unique opportunities.

Access to trusted professionals

Buying property involves several additional services beyond simply finding the right home. These can include legal assistance, mortgage advice, property inspections and more. A professional real estate agent has a wide network of trusted professionals within their sphere of influence.

By utilizing their network, they can connect you with renowned lawyers, mortgage brokers, architects, contractors and other experts who specialize in serving clients within the Ibiza property market. This access to trusted professionals streamlines the property purchasing process and ensures that every aspect is diligently handled by qualified individuals.

Guidance throughout the entire process

Buying property is not simply a transaction; It is a complex process that requires careful attention to details. An experienced real estate agent will be your trusted guide throughout this journey, supporting you at every stage.

From understanding your specific requirements and conducting customized property searches to arranging viewings, negotiating offers, overseeing due diligence processes, and facilitating a smooth closing process, an experienced agent will be by your side from start to finish.

Understanding building regulations in Ibiza

Before thinking of renovating, modifying or extending your newly acquired property in Ibiza, it is important to understand local building regulations. These regulations exist to ensure structural integrity, safety and aesthetic continuity within the island’s unique environment. An agent with deep knowledge of local laws can guide you in advance through the rules and restrictions that could affect your renovation or expansion plans. This experience can prevent complications down the road and ensure your projects align with local standards and requirements, saving you time, money, and potential legal issues. This understanding of Ibiza building regulations is another invaluable asset of working with local experts in your property buying process.

In conclusion, working with a real estate agent is essential when looking for the house of your dreams in Ibiza. Their access to exclusive off-market properties, extensive knowledge of the local market, expert negotiation skills, network of trusted professionals, and guidance throughout the process are invaluable assets that can save you time, money, and unnecessary stress. When choosing a real estate agent in Ibiza, make sure you opt for a reputable professional who understands the complexities

B. THE SEARCH PROCESS

B1. Portals

What role do real estate portals play in Ibiza?

In general, property portals offer a wide range of properties and can be a useful resource for anyone looking to buy a property in Ibiza. However, it is important to note that not all properties are listed on these platforms, so it is always a good idea to work with a local agent who has access to a wider variety of properties and can provide personalized assistance during the purchasing process.

Make sure you take advantage of all the options available to find properties on the market. The agent you choose should have access to all types of properties for sale on the island, including those that are not published (also called “offmarket”).

It is recommended that you yourself visit the real estate portals to have an overview of the market. You can even ask your trusted agent to arrange a visit to properties you don’t have listed, for privacy reasons.

There are several real estate portals that are widely used for Ibiza, both by local and international buyers looking for properties on the island. However, the portals where you will find more properties in Ibiza right now in 2024 are the following two:

Idealista.com [Link >Ibiza]

Kyero.com [Link >Ibiza]

The first being, Idealista, the most used by far.

Due to its good positioning in the United Kingdom and the US, these 3:

Rightmove [Link >Ibiza], JamesEdition [Link >Ibiza] and Zoopla [Link >Ibiza]

Due to its good positioning in Germany, it is also worth considering ImmoScout24 [Link >Ibiza]

B2. Know what you want

What type of house best suits your needs?

When you are about to start looking for a new home, it is important to take a moment and consider what type of property would be best suited for your needs and preferences. Additionally, you should jointly evaluate how much you can realistically afford in terms of a home, as well as how much financing you can obtain.

We all have a different idea of what constitutes the perfect property. To help us to make your wish list, write down your likes and dislikes, then pass this information on to your agent after your first visit. This information will be useful for both of you.

You can, for example, take notes in a notebook or your device with all the details that come to mind. You can create a “must have” list and a “nice to have” (non-essential) list to clarify priorities, or if you have questions about how to do it, simply ask for our notes. An example of common priorities would be:

• Property type: Apartment, semi-detached house, independent house, etc.
• Size: House and Land
• Location: Area, neighborhood, surroundings, etc.
• Views: Sea, countryside, mountains, height, etc.
• Distance to all amenities and services
• Distance to town or city: usually Ibiza City
• Minimum number of bedrooms and bathrooms
• Distribution: open-plan interiors or independence of rooms
• Architectural style: modern, estate, classic, minimalist, etc.
• Kitchen separate from the dining room
• Private garden, land for orchard or fruit trees
• Piscina, privada o comunitaria, etc.
• Guest or employee house

This is a general list, but there are some requirements that are more personal, such as:

– Are you worried about interior space?

– Is gardening one of your hobbies?

– Do you need separate guest house due to your family’s needs?

Another option is to remodel an existing property, whether to take advantage of the opportunity of a lower price, invest in its potential or simply to modify it to your liking. However, it is crucial to consider the substantial amount of time, effort and money required for this transformation. We recommend carefully planning the expenses associated with renovating a property in Ibiza from the beginning and studying the case with a legal advisor. A competent and experienced real estate agent can give you an initial estimate of the remodeling costs, the legal status of the house and whether there is the possibility of expanding or even modifying anything. In any case, once you have identified a property of interest and it is certain that licenses can be obtained, it is recommended that the buyer visit the property with a builder to obtain a more accurate estimate.

Whenever questions arise, simply ask us, without obligation. We understand the importance of local knowledge when it comes to finding the right place to live. Whether it’s weather, traffic conditions, or amenities, we have the experience to guide you in your search for the perfect home. If you come across something you haven’t seen during visits with us, don’t hesitate to ask. Even if you are exploring on your own, we may be able to help you obtain the needed information.

And if you’re struggling to find a property that ticks all the boxes on your list, ask about our design and build service as we can also help you find the ideal land to build on.

The individual nature of the homes on the island makes accurate valuation an inexact science. Quoted prices are often the owner’s aspiration, rather than based on a proper evaluation of sales data. However, properties in Ibiza are generally worth what someone is willing to pay for them, so be prepared to negotiate.

B3. The areas of Ibiza

What distinguishes the different areas of Ibiza?

The island is divided into five municipalities, each with its own unique characteristics. In fact, it is common to hear among people who know Ibiza that each area is like a microcosm within a small island. However, the fact that Ibiza is quite mountainous expands the feeling of its real size.

With the following descriptions we want to describe a little the “character” of each subarea to give a good idea beforehand. That being said, we want to clarify that many of the zones are not mutually exclusive. We have observed that buyers have started looking in a very specific area and after a while have changed their preferences to another area on the other side of the island. Ibiza has many charming places and initial preferences are never final.

It is recommended to do your research and choose the most attractive locations yourself before viewing properties. Here is a brief summary of each municipality and some subzones, to further help you choose your preferred locations:

1. San Jose (Southwest / West / Northwest)

Sant Josep de Sa Talaia (its official name) covers the entire west of the island and is perhaps the most varied municipality, meaning that the culture, community and lifestyle vary greatly depending on the area. The territory of the municipality is mostly mountainous, and, therefore, offers spectacular landscapes and beautiful coasts, with beaches and cliffs with panoramic views.

The municipality also exhibits a diverse culture and style, ranging from authentic charm, a rich historical heritage, to popular party destinations frequented by high-profile celebrities like
the beach of Playa den Bossa. Some notable beaches in the area include the natural park of Ses Salines and Es Cavallet, Cala Tarida, Cala Vadella, Cala Jondal, Cala Conta and Cala Bassa, and another notable natural park in Cala d’Hort, where the geological monument of the Es Vedrà islet is located. In addition, the region is made up of four charming villages: Sant Josep, Sant Jordi, Sant Agustí and Es Cubells.

Buyers interested in purchasing a property in San Jose often classify their preferences into three distinct sub-areas: The interior (The villages of Sant Josep, Sant Agustí or Benimussa), the west (Cala Tarida, Cala Molí, Cala Conta or Cala Vadella) or the south (Ses Salines, Cala Jondal, Es Cubells). There are also five gated communities, arranged here according to their size: Vista Alegre (Es Cubells), Cala Conta 33 (Cala Comte), Parques Cubells (Es Cubells), Sabina Estates (Cala Tarida) and White Angel (Cala Comte).

Properties in the south of San Jose tend to attract buyers looking for more modern villas close to Ibiza Town, popular beaches and popular spots. However, the west coast of San Jose, the small villages and their fincas are usually more sought after by families. Es Cubells and Porroig have been known for decades as being among the most high end areas of the island, and the coast between Cala Tarida and Cala Comte has become a high end area in recent years. If sunset views are a priority, you should consider the west coast from Cala d’Hort north to San Antonio Bay and the surrounding area towards north.

2. Santa Eulalia (Southeast / East / Northeast)

Located on the east coast and in the center of the island, the municipality of Santa Eulària des Riu, by its official name, is known for being the favorite of family tourism and couples looking for tranquility on their vacations. It stands out for its beautiful beaches, a very picturesque countryside and a great gastronomic variety. Although these are qualities that also appear in other municipalities on the island, the main difference that makes Santa Eulalia stand out is that for decades it has followed a policy in contrast to partying, nightclubs and mass tourism, which has resulted in a type of public that provides a particular atmosphere of tranquility and relaxation.

Santa Eulalia consists of a small town (or a large village) that bears the same name, with a marina and atmosphere throughout the year, and three more villages with a lot of charm and a great gastronomic variety: Santa Gertrudis, Sant Carles and Jesus. Santa Eulalia also offers historical heritage, such as Puig de Misa and the village churches, and alternative culture, such as the two hippie markets on the island: Las Dalias and Es Canar. The most notable beaches in the municipality are Aigües Blanques, Es Figueral, Cala Nova and several coves on the picturesque northeast coast, from the town of Santa Eulalia to Es Canar.

The municipality is culturally diverse and attracts local and international residents. Lifestyle in Santa Eulalia offers opportunities for families, couples and high profile tastes. Buyers interested in purchasing a property in Santa Eularia often classify their preferences into five distinct sub-areas: Santa Eulalia Town (and Siesta), northeast coast (Sargamassa, Cala Martina, Cala Llenya, Es Canar), east coast (Cala Llonga, Roca Llisa), the interior (Santa Gertrudis, Sant Carles, Morna Valley) and proximity to Ibiza Town (Jesus, Talamanca, Can Pep Simó, Cap Martinet, Can Furnet). There are also five gated communities, listed here according to their size: Roca Llisa (east coast), Can Furnet (Jesus), Can Rimbau (Jesus), Es Pouet (Talamanca) and White Angel (Talamanca).

The type of buyer who is interested in properties in the interior of the municipality usually comes from a special enthusiasm for the character of the island’s iconic countryside, its tranquility, and additionally the proximity to the unique beaches, the hippie culture, the gastronomic offer or simply being away from the hustle and bustle of the other side of Ibiza. This type of buyer is not usually limited to the interior of Santa Eulalia only, but also considers the municipality of Sant Joan, since it is geographically close and shares many of the characteristics in the rural and bohemian atmosphere of Ibiza. A second group searches for proximity or direct views of the sea, and in turn searches in areas near the coast and in an environment with neighbors, which includes Santa Eulalia town, Siesta, Cala Llonga (east coast), Cala Llenya (northeast coast) and the urbanization of Roca Llisa. There is a third profile that also looks for the coast, but does not look for neighbors but for privacy and a larger plot of land, in which case it will prefer sub-areas such as the northeast coast and some parts of the east coast. Finally, there is another type of buyer who has a preference for proximity to Ibiza City and will look in areas such as Jesús, Talamanca or the developments of Can Furnet and Can Rimbau.

3. San Juan (North / Northeast)

The municipality of Sant Joan de Labritja, by its official name, is located in the northernmost part of the island and is the least populated municipality by far. Its extensive mountain ranges, agricultural valleys, extensive forests and small towns together show a municipality with a rustic character, wild nature and a varied coast between cliffs, hidden coves and few larger beaches. In San Juan, visitors will find nature excursions, impressive landscapes and panoramic views, both inland and on the coast.

The municipality’s culture and lifestyle attracts both locals and an international audience, often associated with a relaxed, bohemian atmosphere that feels like a world of its own, separate from the rest of the island. San Juan has four traditional towns (San Miguel, San Vicente, San Lorenzo and San Juan) and an urbanized and tourist area in Portinatx.

Buyers interested in a property in San Juan often classify their preferences into four distinct sub-areas: The interior of the island (San Lorenzo, San Miguel, San Juan and surrounding areas), the northern coast (Puerto de San Miguel, Benirrás, Portinatx), the mountains of Morna and San Vicente. There is no gated community in the municipality of San Juan, the most similar would perhaps be the neighborhoods of Portinatx and Cala San Vicente.

The type of buyer who is interested in properties in the interior of the municipality of San Juan is similar to the character of the interior of the municipality of Santa Eulalia; perhaps with the difference that the distance to an urban center matters less to them. In the case of interest in the northern coast, it is probably a preference for panoramic sea views, as occurs in Na Xamena, with cliffs more than 100m high and that mark the character of almost the entire stretch of the north coast. The mountains of Morna, San Vicente and Cala San Vicente, are the most isolated and least developed areas of the entire island, therefore they attract a type of people who enjoy tranquility, wild nature and do not need proximity to the urban center but more the opposite of that.

4. San Antonio (North/Northwest)

The municipality of Sant Antoni de Portmany is famous for its sunsets, its beaches, its vibrant nightlife and the great influx of tourism. The beauty that permeated the region was captivating and was highly sought after by the first tourists in the 1960s. However, the lack of conscious regulation in the 60s/70s reveals a certain overexploitation and malpractice in its urban development. Along almost the entire stretch of coast there are buildings from a time when occupation was rewarded rather than avoiding the visual impact on the natural environment. However, when you move a little away from the city, you will find very charming places, coves, mountains and the most charming rustic areas of the island.

The culture and lifestyle of the municipality shows a contrast between the bay and everything outside of it. For at least five decades, the urban area and the bay of San Antonio have been oriented towards mass tourism, mainly young and low-budget, attracted by partying and fun. However, in this last decade, San Antonio has suffered an identity crisis: while large hotels and tour operators continued to base their business model on the previous standard, initiatives have emerged from municipal politics and some businessmen to take another course, to elevate the level and nature of tourism. Although it cannot be said that they have yet been completely successful in their initiative, green shoots of change are beginning to be seen thanks to certain public works, new gastronomic and hotel offers by mainly young entrepreneurs, attracted by the lower land prices of the island.

As for the rest of the territory outside the bay, the character tends to be almost the opposite, with some of the enclaves being the quietest, most isolated and most rural in all of Ibiza. Sant Antoni de Portmany has three traditional towns with a lot of charm: Santa Inés, San Mateo and San Rafael.

Buyers interested in a property in San Antonio often classify their preferences into three distinct sub-areas: The coast north of San Antonio (Can Germà, Cala Salada and Punta Galera, all with direct access to the sunsets and the sea), the mountains of the north coast (the stretch of coast that goes from the north of San Antonio to Santa Inés) and the entire interior of the municipality (all the rural areas of Santa Inés, San Mateo and San Rafael). There is no gated community in the municipality of San Antonio, the most similar would perhaps be the neighborhoods of Can Germà and Punta Galera, both in the same area.

The type of buyer who is interested in coastal properties north of San Antonio has a predilection for ocean views, sunsets and proximity to the city. This is followed by the mountains of the north coast to Santa Inés, which is proposed for a client profile looking for isolated villas, with a lot of land, a private road, privacy and, in most cases, spectacular views. Regarding the interior of the municipality, it can be said that it is the same profile as in the two previous municipalities, with a special attraction for the rustic atmosphere of Ibiza. Perhaps it is worth mentioning that these properties, as they get closer to San Antonio, have a tendency to be cheaper than in rural areas like Santa Eulalia, but it will always depend on many other factors, such as tranquility and proximity to a highway with traffic, for example.

5. Ibiza Town – Eivissa (South)

Eivissa, by its official name, does not seem like a large city by population (around 80,000 inhabitants throughout the year), but without a doubt it is a vibrant city and that is becoming increasingly more so. Over the decades it has attracted a more cosmopolitan group of people that has come to stay all year round, opening local businesses and enriching the place even outside of the high season. It is a dynamic city, but at the same time offers the tranquility of a small town in certain areas, especially in the old town, the citadel of Dalt Vila.

The old town, which is divided into Dalt Vila, the large walled citadel, designated as a UNESCO World Heritage Site, and the vibrant old port. The latest public developments there and on Passeig de Vara de Rey have created a mainly pedestrian center and have undoubtedly beautified the entire place. In addition to its rich cultural heritage, Ibiza has two popular beaches, Talamanca and Figueretas within walking distance of the center. A little further along the stretch of coast is the Paseo Maritimo, with an ample long reaching promenade, famous for its collection of luxurious apartments, the marinas and the nightlife of clubs and high-end gastronomic offerings.

The profile that is interested in Ibiza Town undoubtedly seeks the urban environment and is mainly differentiated by an interest in the charm of the old town or, on the other hand, by the modern and luxurious Paseo Maritimo, which also offers proximity to the beach of Talamanca, the marinas and the frontal views of Dalt Vila. Within the old town, there is an audience that specifically seeks to live within the citadel of Dalt Vila and another that seeks it outside, such as the port or the center. It can be said that the port of Ibiza has its own character due to its particular atmosphere.

B4. Get most out of your viewings

Viewing properties is an exciting experience, but it is also an important decision that must be approached with care and attention to detail. Here are some tips on how to make the most of viewing a home to buy:

1. Prepare in advance: Before visiting a property, be sure to do your research and prepare a list of questions to ask your real estate agent or the seller, if he/she is present during the visit. Additionally, you should have a clear idea of your budget, so you can focus on properties that meet your needs.

2. Take your time: When viewing a property, take your time and explore every room and corner. Try to imagine yourself living in that space and think about how it would fit into your lifestyle. If possible, visit the property more than once at different times of the day to get a better idea of the lighting, noise level, and surrounding area.

Asking questions is easier when you are there and if you need an explanation, you can see it while you are there. Don’t be afraid to ask.

Some examples of questions that are usually asked of the owner or his representative:

-Reason for sale: Ask why the current owners are selling the property. Understanding their motivations can provide useful context.

-The property’s history: Find out about any renovations, repairs or updates made to the property. Knowing when they were completed can give you an idea of possible future maintenance requirements.

-Area information: ask about community services, distance to shopping areas, schools, beaches and other options that may interest you. Gathering information about the area will help you imagine what it would be like to live there.

3. Look beyond the decor: Try to look beyond the decor and furnishings of the property. Instead, focus on the basics of the property, such as layout, natural light, and overall condition.

Some more specific examples:

-Good air circulation is essential to maintain a pleasant living environment.

-Look for potential problems, such as leaks, cracks or moisture, and ask the seller or agent about any renovations and/or repairs that have been made to the property. Ceiling cracks or wet spots could mean a problem that needs to be resolved or it could simply be condensation or poor decorating, both of which can be easily remedied.

-Consider whether the kitchen layout suits your culinary needs. Kitchens and bathrooms are often the most expensive to renovate, so take the time to look them over carefully.

-You can also check the exterior of the house by walking around the building and the boundary walls. Find out where the sun rises and sets. If the yard has a pool or spa, check the pumps/plumbing.

-Outdoor seating areas can expand your living space and provide a quiet place to enjoy the fresh air, especially in favorable climates like Ibiza. If the property has a patio or garden, evaluate its size and maintenance requirements. Consider whether it suits your lifestyle or gardening ambitions.

4. Explore the surrounding area: be sure to explore the surrounding area, including the neighbourhood, amenities and transport links. Think about how the location would fit your lifestyle and consider factors such as commute times, school districts, and local attractions.

5. Take notes: During the visit, take notes and, if the property allows, photographs so you can refer to them later. This can help you compare properties and make an informed decision.

At the end of your visits we will list the properties seen along with their details and price. Its very useful to letting us know what you like and don’t like or if you’ve re-evaluated your original requirements. It will help us evaluate your tastes more precisely, which will allow us to offer you a product that is more tailored to your preferences. There may be other houses or apartments within our portfolio that better suit your needs and we will inform you of new interesting products that enter the market.

By considering factors such as location, structural integrity, natural lighting, storage space, outdoor areas, and asking relevant questions during viewings, you will be well equipped to make an informed decision when purchasing. Remember that each property is unique – finding one that fits your needs and preferences may take time, but it is worth the effort.

B5. Negotiation

Once you have identified a property you are interested in, the following steps follow:

Make an Offer

Your agent will help you decide how much money you want to offer for the home, along with any terms you want to request. Your agent will then present the offer to the seller; the seller will accept his offer or issue a counteroffer. Then you can accept or continue going back and forth until you reach an agreement or decide to leave it.

Also, think ahead: It’s easy to get ambushed by higher or unexpected utility costs, property taxes, or neighborhood association fees… You can request the last 12 months of water and energy bills to have an idea of the average monthly or annual disbursement.

If you reach an agreement, the parties will sign a pre-contract with a deposit, usually 10% of the agreed price.

Home Inspection & Legal Checks

At this stage of the transaction, whether you are in the middle of the negotiation process or if the seller has communicated acceptance of your offer, you can make certain checks before moving on to the next step (which is usually signing a pre-agreement or reservation contract).

Get a home inspection

If you wish, you can request a home inspection by an engineer, architect or builder. Even if the home you plan to purchase appears to be immaculate, it is recommendable to have a trained professional inspect your potential new home for quality, safety and overall condition. If the home inspection reveals serious defects that the seller did not disclose, you will generally be able to rescind your offer and get your deposit back or negotiate for the seller to make repairs or discount the sales price are other options if you find yourself in this situation.

Essential legal checks before buying a house:

To protect your investment and ensure a smooth transition to home ownership, it is essential to carry out thorough legal checks before signing on the dotted line. This is where a lawyer or a gestoria is helpful.

Your lawyer is usually cheking the following:

-Verification of property title: review of the title of the property to confirm that the seller actually has the right to sell the property and that there are no mortgages or liens outstanding against it.

-Check building permits and licenses: evaluation of all building permits and approvals to see if all existing structures on the property have been made in compliance with local building codes and regulations. This includes renovations, additions or any other modifications made to the house. This step can save you from potential legal problems or costly repairs in the future.

-Zoning restrictions: zoning laws regulate how land can be used within a particular area, such as residential, commercial, or mixed-use. The zoning regulations for your desired property will be researched to ensure they fit your intended use. For example, if you plan to establish a home-based business or build an additional structure on the premises. Consulting with local planning authorities or zoning experts can provide clarity on any potential limitations or future development possibilities.

-Check the rules and regulations of the Homeowners Association: in the case of purchasing a property within a planned community or a condominium complex (neighborhood community or gated community), governed by a homeowners association, be familiar with its rules and regulations, through which specific guidelines are imposed that the Residents must comply with regards to property maintenance, exterior modifications, noise restrictions and more. Additionally, the bylaws will be reviewed to inform you about your expectations and ensure they align with your lifestyle preferences. Additionally, knowing any associated fees or assessments required will avoid unexpected financial obligations after moving into your new home.

Close or move on

At this stage of the home buying process, you’re ready to decide if this is the place for you or if it’s time to move on and look at other homes.

If you can reach an agreement with the seller and the inspection did not reveal any major problems, you should be ready to close the deal. Closing basically involves signing a variety of documents in a very short period of time and hoping that nothing falls through at the last minute.

The following you will need to deal with and pay for in the final stages of your purchase may include having the home appraised if you need a mortgage (bank’s require this and instruct their own appraisal firms).

C. THE BUYING PROCESS

Once the ideal property in Ibiza has been chosen, how is the purchase process carried out?

The process of buying a property can be basically divided into three phases: reservation contract or pre-agreement, due diligence and finally the deed of sale.

C1. Standby and pre-settlement contracts

The phases and contracts of the process of buying a property in Ibiza

Once you have decided on a property and have reached a pre-agreement on price and conditions with the seller, the buying process begins.

Basically, in a nutshell, it is about reserving the property for a period of time so that the buyer can do due diligence (check that everything is in order) in exchange for some guarantees for both parties.

* Before making a pre-agreement or reservation, it is essential to see the simple note (in Sp.: nota simple) of the property, since the most relevant information is described there: owner, characteristics, dimensions and encumbrances. Even so, due diligence allows to go deeper and confirm that the information in the simple note is 100% correct, as it is not always up to date and/or omits details that may be important, as we will see below.

Earnest money contract and private purchase contract

The first contract you are likely to encounter as part of the process of buying your property is some form of earnest money contract or private purchase contract, backed by a deposit or legal liabilities or both.

In other words, this contract serves as a contractual agreement between the buyer and seller to reserve the property exclusively for a specific period in order to do due diligence, to check that everything is in order as agreed between both parties, before taking the final step which is the title deed, i.e. the final transfer of the property.

The main objective of this contract is to assure both parties that the process of the purchase and sale is started in a serious way, with legal or economic assurances that both parties would have the right to claim in case of non-compliance with what has been agreed.

The earnest money contract normally requires the payment of a deposit by the buyer (usually 10% of the total purchase amount) to secure his interest in the property. This amount can be transferred to the seller or an intermediate party, such as your lawyer or a notary, depending on how it is agreed between the two parties.

These contracts set out specific terms such as:

-Purchase Price: The price agreed to acquire the property.

-Payment terms: Details of deposits, payment schedules and penalties for late payments.

-Completion Date: The date set for completing the purchase and transferring the property.

-Property details: Full description, including size, location, amenities and associated rights or restrictions.

-Liabilities and Warranties: Clauses specifying liabilities, existing debts and warranties on the condition of the property.

-Provisions for non-compliance: Consequences of non-compliance, including financial penalties and dispute resolution mechanisms.

-Other agreements: Any additional conditions agreed between buyer and seller.

* Make sure all terms are clearly defined to avoid misunderstandings or future disputes.

There are two main types of reservation contract:

1.1 Private purchase contract

You can choose to sign a private purchase contract (PPC) directly, where the seller agrees to deliver the property and the buyer agrees to pay a certain price for it. The buyer can pay the seller an agreed amount after signing this contract, usually 10%, as a down payment, good faith deposit or guarantee.

Once the agreement is signed, both parties are obliged to honour it on the agreed terms and conditions. Breach by either party entitles the other to demand performance of the contract or its unilateral termination, with the right to damages.

1.2 Deposit contract / purchase option

The most common private contract with payment of a deposit is known as a ‘deposit contract‘ or ‘purchase option contract‘. In this, a partial amount (usually 10%) is given as a deposit. The terms of the contract state that if the buyer withdraws, the seller may retain the deposit. However, if the seller withdraws, the buyer is entitled to receive double the deposit paid.

The main difference with the private purchase contract is that the deposit contract or purchase option gives comparatively more freedom to both parties, as there is the possibility to withdraw from the purchase with a financial penalty but without legal consequences. It can be said to be a more “flexible” binding contract for both parties.

C2. Due diligence

What is due diligence and what is it for?

After signing the pre-agreement, it is time to make the necessary checks. It is necessary to verify that what the seller says coincides with reality, both in the legal situation of the house, the administrative or economic burdens, as well as in the conditions of the construction. These verifications can vary according to the priorities of each one.

The due diligence phase is fundamental and involves a thorough investigation of several key aspects related to the property, including a thorough legal review and a detailed assessment of its current status. While due diligence is not a contract in itself, it is an integral part of the purchase process that can help identify and mitigate any potential issues or risks associated with the subject property. By investing the necessary time and resources at this stage, buyers can make an informed decision with greater confidence, allowing them to avoid unpleasant surprises and ensure a smooth and successful transaction.

* Check the title deeds: If you have not already done so, now is the time for the seller to provide the buyer with a copy of the title deeds so that his lawyer can confirm the correct description of the property. The deeds contain details such as the amount of land, boundaries, built-up area, internal divisions, external areas and other highlights of the property.

For a proper due diligence, consider exploring:

2.1 Review the property documentation

What aspects of the property should be reviewed for due diligence?

Your lawyer will play a vital role at this stage by examining various legal documents relating to the property. These may include:

-Title deed: The title deed provides proof of ownership and contains essential information about the property, including its boundaries and any recorded restrictions or encumbrances.

-Land registry: Your lawyer will search the local land registry to verify that all necessary records are in order. This search helps to uncover potential problems or discrepancies relating to existing property rights or mortgages on the property.

-Cadastral registration: Unlike the land registry, the cadastre records the dimensions, location and classification of the property. It displays information such as maps, plans and some aerial photographs. For example, your lawyer may be able to identify if the cadastre shows discrepancies between the property documents and the deeds.

-Newly built properties: If the property has been built within the last five or six years, make sure that both the certificate of completion (certificado de final de obra) and the licence of first occupation (licencia de primera ocupación) have been obtained. These documents guarantee that the construction has been carried out legally and with all the corresponding permits.

-Urban properties: if it is an urban property, it is important to understand the urban planning regulations and zoning restrictions specific to your area, i.e. information should be consulted with the town planning department. Your lawyer should inspect the town council’s urban plan detailing what can and cannot be built around the property, and ensure that there are no future developments or road extensions planned that could affect your investment.

-Rural properties: If you are dealing with a rural property, it is essential that your lawyer carry out a thorough investigation of the different easements associated with this type of property. You should pay attention to such things as road easements, view easements, hunting rights, and even the right to draw water from private wells or streams that run through your property.

-Properties on the coast: If the property is less than 500 metres from the coast, it is necessary for your lawyer to verify that the property does not infringe the Coastal Law.

-Irregular extensions: There are frequent cases of irregular documentation on properties in Ibiza. Your real estate agent should inform you in advance about the legal situation of the property, but a lawyer is needed to help you confirm the situation before you buy. It is recommended to seek advice from a specialised lawyer or a gestoría.

2.2 Construction inspection

If you have not done so during the negotiation phase, now may be the time to carry out a building survey. Hiring a professional surveyor can provide valuable information about the physical condition of the property. Examples include inspecting the structure, plumbing, electrical systems and general condition of the building. This survey will help assess its structural integrity and highlight any existing defects or areas that require attention. This information can be crucial in identifying potential structural problems or needed repairs, allowing you to make an informed decision on the value of the property, future maintenance costs and negotiate final terms with the seller.

2.3 Financial evaluation

Conducting a financial check involves reviewing documentation related to expenses such as community fees, utility bills and local taxes associated with the property. It is essential to ensure that there are no outstanding debts or liabilities associated with the property before finalising the purchase.

Some important aspects to consider:

-Taxes paid: it is important to check that you are up to date with your municipal tax payments, such as Property Tax (IBI).

-Checking that the property is free of debts, charges and liens: this is crucial, as in Spain debts are held against the property, not the seller. This means that any liens or encumbrances on the property are transferred to the new owner.

-Check for tax retentions: your lawyer should check the background of the property, such as the number of owners in the last 4 years and whether any were non-resident. If there has been a change of non-resident ownership, you will need to check that the 5% withholding tax was paid to the authorities. If the property has not changed hands in the last 4 years and 1 month, there will be nothing to check.

-Advance succession planning: Property can be registered in different forms, such as in the name of a single person, a couple or joint purchasers, or a company. Before registering, it is important to consider the tax and inheritance consequences.

-Furniture: When the property is sold including furniture of any value, it is important to request a signed inventory detailing these items.

-Bills: It is advisable to verify that all utility bills are current. This includes water, gas, electricity and telephone. To do this, it is suggested to obtain copies of the most recent receipts provided by the seller.

2.4 Mortgage Contract

If you are financing the purchase of your property through a mortgage, you will need to sign a mortgage contract. This contract outlines the terms and conditions agreed between you and the bank providing the mortgage. Key aspects normally covered in this agreement include:

-Loan amount: the total amount being borrowed to finance the purchase of the property.

-Interest rate: The agreed interest rate for the loan, which determines the cost of the loan.

-Payment terms: details on payment schedules, instalment amounts and applicable penalties or fees.

-Insurance requirements: Specifics on the insurance coverage required by the lender to protect its investment.

-Default provisions: Consequences and actions that can be taken in the event of default or non-payment of the loan.

Be sure to carefully review all the terms of the mortgage contract to understand your financial obligations and rights as a borrower.

C3. The Deed of Sale

3.1 Signature at the notary

The Escritura de Compraventa, also known as Escritura Publica, is the final contract that officially transfers ownership from the seller to you as the buyer. In Spain, this contract is signed before a notary public and requires the presence of both parties (or their legal representatives) for its execution.

The key elements included in this deed are:

-Identification details of the buyer and seller

-Description of the property and registration information

-Confirmation of the purchase price

-Payment details, including any outstanding balance settled during the signing

-Statements by both parties of their legal capacity to enter into this transaction

Once signed, this contract is registered with the Spanish Land Registry, officially documenting your ownership of the property.

* Buying from a non-resident (3% withholding)

If you buy your Ibiza property from a person who is not a tax resident in Spain, you must withhold 3% of the purchase price and pay it to the Spanish Tax Agency within 30 days of the transaction. The payment, a kind of deposit, is a “guarantee” against the seller’s attempt to avoid paying capital gains and other taxes. As long as you pay it to the Hacienda within 30 days, the capital gains tax (CGT) cannot be reclaimed from you even if the seller’s debt is more than the 3% withheld.

If you, as the buyer, do not withhold and pay the 3%, you will have to pay capital gains tax on the sale and could be fined.

A resident must have a certificate proving tax residency in Spain. Check with your gestoría or lawyer whether you are buying from a resident or not. Most of the time your gestoría will check this before the notary appointment and inform you of this.

3.2 Procedures after the signing of the title deed

After the signing of the public deed before the notary, the acquisition of the property by the buyer becomes official. There are now certain post-writing steps to be taken in order to anchor everything, which are as follows:

1. Change of ownership in the Land Registry

After the signing, the notary will immediately send an electronic copy to register the deed in the Land Registry in the name of the buyer. The land registry will open a filing entry that is valid for 60 days. This obliges the buyer (through a gestoría, for convenience) to register the property in his name, with the same encumbrances existing at the time of signing.

2. Pay the taxes

In the case of the purchase of a second-hand property, the buyer must pay the Transfer Tax (ITP). On the other hand, in the case of the purchase of a newly constructed plot of land or building, the buyer will have to pay Value Added Tax (VAT) as well as Stamp Duty (Impuesto sobre Actos Jurídicos Documentados). Both are explained in the first section of the guide.

3. Notifying the town hall

The buyer must notify the town hall of the transfer of the property by presenting a copy of the title deed (normally this is done at the notary’s office, electronically) and, *if the property is on urban land, the capital gains tax must be paid. This is a relatively very low tax that must be paid by the seller, but in case of non-payment the debt remains with the property. Here the buyer only has to bear in mind that either the seller presents a receipt that this tax has been paid, or, alternatively, a reduction is applied to the sale price to compensate for this amount and is paid by the buyer.

Final steps after acquiring the property

Once the tax and registration payments for the property have been settled, it is beneficial to carry out a few simple final steps:

• Register the property’s utilities or change them to your name: electricity, water, gas, telephone, internet. If it is a newly-built property, make sure that when the keys are handed over, you also receive the bills for contracting electricity, water and gas.

• Keep copies of the deeds and mortgage, it is important that these documents are always at your disposal and in a safe place.

• Keep all the documents, invoices and guarantee receipts that have to do with the purchase, as they may be needed if you decide to sell the property.

• Present yourself to the president or administrator of the community so that they can identify you as the new owner.

• You can check the ownership in the land registry, by means of a letter confirming the change.

D. AFTER ACQUIRING THE PROPERTY

What to consider after buying a property in Ibiza?

If you are a first time buyer, you will be interested to know some of the responsibilities that come with a property in Ibiza. To finish this guide in a complete way, we will explain the most essential aspects to take into account after buying a house in Ibiza.

D1. Property taxes and costs

What taxes and expenses are there when owning a property in Ibiza?

While owning a piece of this beautiful island brings a good deal of joy and excitement, it is important to understand the financial obligations. This article looks at the taxes associated with owning property in Ibiza, both for residents and non-residents. A thorough understanding of these taxes will enable you to deal with your financial responsibilities diligently.

Annual costs

1. Annual Property Tax (IBI)

The Property Tax (IBI – Impuesto de Bienes Inmuebles) is a tax that affects all property owners, regardless of whether they are residents or non-residents. In order to calculate this tax, the cadastral value of the property is used as the taxable base, which is determined by the town hall of the corresponding municipality. It is important to note that this cadastral value is generally significantly lower than the real market value of the property.

The IBI rate varies between 0.3% and 1.1% of the cadastral value. This variation depends on two main factors: first, whether the property is located on rural or urban land, and second, the municipality in which it is located. Each municipality has the power to set its own rates within this range, which explains the differences that may exist between different localities.

2. Wealth tax

If you own real estate in Spain, whether you are a resident or non-resident, you may also be subject to Wealth Tax.

Spanish tax legislation is very regionalised, so wealth tax rates vary from one autonomous community to another.

In the Balearic Islands, since 1 January, the exemption from paying wealth tax has been increased to €3,000,000 of the total value of the estate, for both residents and non-residents. From this figure onwards it is paid in bands, and increases gradually between 0.28-3.45%, which is calculated in tranches and applied on the purchase value of the property. Here is a table extracted from the official website of the tax agency of the Balearic Islands:

* As the tax situation is constantly changing, we recommend that you consult a tax advisor or lawyer to get all the information at first hand.

3. Non-Residents Income Tax

If you are a non-resident property owner in Ibiza and you generate rental income from your property, you will also need to consider Non-Resident Income Tax (IRNR). This tax applies to rental income earned by non-residents in Spain.

The tax rate applicable to non-residents is usually 19% of the net rental income received. However, it is essential to bear in mind that this rate may vary depending on the double taxation agreements between Spain and your country of residence.

4. Community fees

If your property is part of a community or residential complex with shared amenities or services, such as a swimming pool or security, you may have to pay monthly or annual community fees. These fees contribute to the maintenance and upkeep of the common areas.

D2. Typical maintenance costs

What kind of maintenance costs are to be expected in Ibiza?

Owning a property in Ibiza comes with ongoing maintenance costs that are important to consider. While these costs can vary depending on the size and condition of your property, here are some common expenses to anticipate:

Property insurance

Protecting your investment is crucial, so it is recommended that you have property insurance to cover possible damage caused by natural disasters, theft or accidents. The cost of insurance will depend on factors such as the value of your property and its location.

Utilities

Don’t forget to budget for utilities such as electricity, water and gas. It is advisable to set up automatic payment plans for these services to ensure timely payments.

Maintenance and Repairs

Regular maintenance is essential to keep your property in good condition. This includes routine tasks such as cleaning, gardening and pest control. In addition, unexpected repairs may arise from time to time, so it is advisable to have a contingency fund for such situations.

Property management fees

If you do not live in Ibiza on a permanent basis or prefer not to take care of the day-to-day management of your property yourself, you might consider hiring a property management company. Their services may include key holding, rental management (if applicable), regular inspections and arranging any necessary repairs. Please note that there is a cost for these services.

To conclude, buying a property is a crucial step that requires a clear definition of personal needs and priorities. This will allow you to effectively filter the options available in the Ibiza property market. It is useful to thoroughly research the market, know the current prices and the various factors that influence the value of properties. Visiting and carefully examining each option is essential in order to make a decision. In addition, financing alternatives should be explored and a realistic and well-defined budget should be maintained. Having the advice of industry experts can also make a difference and greatly increase the chances of finding the ideal property.

Buying a home represents a major investment and a significant step. With careful planning and the right support, your chances of success will be greatly increased. At Kelosa, we are here to answer any questions you may have, and we hope this guide has been helpful.

Additional resources:

Investopedia: “How To Buy a House: A Step-by-Step Guide”

Idealista: “Why live in Ibiza? Cost of living and best areas on the island”