It seems that the British pound is registering a favorable period, having achieved a 1.217 Euro threshold. This then is a favorable time for British investors as well, who are looking to the Mallorca property market for new acquisitions.
The overseas property buyers in the United Kingdom are advised by the local Mallorca real estate agents to take advantage of the recent strengthening of the pound and make purchases without delay.
The reason for this rush is that starting with May 1st the Property transfer Tax is due for an increase. This bit of news comes from Stephen Dighr, the Managing Director of Mallorca Sotheby’s International Realty who had this to say on the matter: “The eurozone debt crisis is weighing heavily the European Central Bank’s and politicians’ shoulders which makes sterling appear to be attractively stable and increase in value. It’s no secret that Spain is one of the countries causing most concern and as a result the Government is putting pressure on the autonomous regions to do their bit to address budget issues. For the Balearics, the latest initiative is an increase in ITP or Property Transfer Tax which comes into effect on 1 May. Buyers would do well to push through any transactions prior to that date.”
This increase was announced at the end of March and it’s already been put into effect as follows: for the first 300,000 euros of a resale property will be taxed as 7%, the next 200,000 at 8%, the next 200,000 at 9% and anything in excess of 700,000 euros at 10%. You should know that before this change was enforced, the tax was 7% regardless of the value of the purchase.
Newly-built properties are exempt from this tax and instead are subject to the IVA tax, which has been reduced last year from 8% to 4%, in an effort to try to breathe some life in the Mallorca property market. It was voted in late 2011 and has been prolonged until the end of 2012.