Top Mistakes to Avoid When Buying Property in Mallorca

Top Mistakes to Avoid When Buying Property in Mallorca

Buying property in Mallorca can be a rewarding investment, whether you’re purchasing a second home, a vacation rental, or a retirement property. However, the process can be complex, especially for international buyers. Avoiding certain mistakes is key to ensuring a smooth and successful property transaction in this beautiful Spanish island.

In this guide, we’ll walk you through the top mistakes to avoid when buying property in Mallorca to help you make the best possible decision in 2025.

1. Not Understanding the Local Real Estate Market

Real Estate Prices and Market Trends

The Mallorca real estate market is quite dynamic, with prices varying greatly from one area to another. It’s crucial to do market research to understand the trends and make an informed decision.

• Popular areas like Palma, Puerto Andratx, and Santa Ponsa tend to have higher prices, especially for luxury properties. However, emerging areas such as Alcúdia and Pollença might offer better value for money.

• Seasonal price fluctuations: Mallorca’s real estate market is often influenced by tourist seasons, so prices may be higher in peak season.

Tip: Hire a local real estate agent who understands the nuances of the market and can advise you on areas that offer the best investment potential.

2. Ignoring Hidden Costs and Fees

When buying property in Mallorca, it’s easy to focus solely on the purchase price and overlook the additional costs. However, the true cost of buying property can be significantly higher due to taxes, notary fees, and maintenance costs.

• Property transfer tax (ITP): 8% to 10% of the property price.

• Notary and registry fees: Between 0.3% and 1% of the property price.

• Annual property taxes (IBI): 0.4% to 1.1% of the cadastral value of the property.

  
  

Tip: Budget for approximately 10% to 15% of the property price for taxes, legal fees, and other related costs.

3. Not Hiring a Lawyer or Legal Expert

One of the biggest mistakes when buying property in Mallorca is skipping the legal process or trying to navigate it alone. The legal procedures involved can be quite complex, especially for foreign buyers.

• Checking property titles: It’s crucial to ensure the property is free of debts, mortgages, or legal disputes.

• Signing contracts: All contracts, including the preliminary sale contract (arras) and final deed (escritura), should be reviewed by a lawyer to protect your interests.

  
  

Tip: Hire a qualified local lawyer who can guide you through the process, verify the property’s legal standing, and ensure all contracts are in your best interest.

4. Overlooking the Property’s Condition and Maintenance Needs

Many buyers make the mistake of not thoroughly inspecting the property before committing to the purchase. Minor repairs or hidden defects can lead to unexpected expenses down the road.

• Older properties might have issues with plumbing, electrical systems, or insulation.

• Construction quality: Not all properties are built to the same standards, and some might require significant updates to meet modern standards.

  
  

Tip: Always commission a professional survey or property inspection before finalizing the deal to ensure the property is in good condition.

5. Neglecting the Long-Term Rental Market Potential

If you plan to use the property as a rental, whether short-term or long-term, it’s essential to assess the rental market in the area. Some regions of Mallorca are heavily regulated for vacation rentals, while others may offer higher returns.

• Tourist areas: Locations such as Palma, Port de Sóller, and Santa Ponsa are more suitable for short-term vacation rentals.

• Residential areas: Properties in quieter areas may be better for long-term rentals to expatriates or retirees.

Tip: Research local rental regulations and determine if the property you’re considering can be legally rented out. Consider the potential rental income and long-term profitability.

6. Choosing the Wrong Location

Choosing the right location is crucial, especially if you’re buying property in Mallorca as a second home or for investment purposes. Many buyers fall in love with a property but fail to consider its proximity to important amenities and transportation options.

• Proximity to the beach: Properties near the coast tend to have higher demand and rental returns but may come at a higher price.

• Accessibility: Areas near Palma’s airport or major roadways are more desirable for long-term residents and tourists.

• Local amenities: Consider the availability of schools, shopping centers, hospitals, and other key services.

  
  

Tip: Visit the area multiple times, at different times of the year, to get a feel for its livability and accessibility.

7. Failing to Understand the Tax Implications

When buying property in Mallorca, especially as a foreigner, it’s important to understand the tax implications. Not doing so can lead to unexpected tax liabilities in the future.

• Wealth tax: If you are a tax resident in Spain and your assets exceed €700,000, you may be subject to wealth tax.

• Capital gains tax: When selling property, you’ll be taxed on the capital gains, with a rate of 19% for non-residents.

• Rental income tax: If you plan to rent the property, you’ll need to declare rental income, which is taxed in Spain.

Tip: Consult with a tax expert to understand the tax laws and structure your finances efficiently before making a purchase.

8. Rushing the Decision Without Proper Due Diligence

Buying property is a major investment, and rushing into it can lead to mistakes. Many buyers make impulsive decisions without fully understanding the legal, financial, and personal implications.

• Proper due diligence: Take your time to research the market, verify the property’s legal status, and consult professionals.

• Comparison shopping: Don’t settle for the first property you find; compare options to ensure you get the best value.

Tip: Always take your time, do your homework, and make sure you are 100% satisfied with your decision before finalizing the deal.

Conclusion – Avoid These Mistakes for a Smooth Property Purchase in Mallorca

By being aware of these common mistakes and following the tips we’ve outlined, you can avoid costly errors and ensure that your property purchase in Mallorca goes smoothly. Whether you’re buying for personal use or investment purposes, doing your research, hiring the right professionals, and carefully considering all factors will help you make a smart, successful purchase.

👉 Ready to buy property in Mallorca?

Contact The Grand Catalan Company via www.grandcatalan.com for expert guidance and assistance throughout your property buying journey.