Mallorca property buyers urged to take advantage of Sterling high
Mid April saw the pound hit a 19 month high to make it worth 1.217 euros. The last time sterling had such strength against the euro was way back in September 2010. This is good news for would-be overseas property buyers although Mallorca Sotheby’s International Realty is urging clients to make the leap without delay as Property Transfer Tax is due an increase from 1 May.
Stephen Dight, Managing Director of Mallorca Sotheby’s International Realty, says the sterling high and the Balearic tax increase are not mutually exclusive, “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.”
Announced at the end of March with only a month to adjust, the new ITP payment structure places property into price bands. From 1 May the first 300,000 euros of a resale property will be taxed at 7%, the next 200,000 euros – that is to say up to a purchase price of 500,000 euros – at 8%, the next 200,000 euros at 9% and anything in excess of 700,000 euros at 10%. The previous system applied 7% across the board. New build homes are exempt from ITP and instead are subject to IVA which has been reduced from 8% to 4% to inject life into the property market. This incentive came into play mid 2011 and has been extended to the end of 2012.
With Mallorca Sotheby’s International Realty typically focusing on the higher end of the property market, the sterling high will make a vast positive difference to the buyer’s bank balance. At today’s rate a million euro home would cost 822,100 pounds versus 884,063 pounds on the exact same date one year ago – a saving of almost 62,000 pounds. The trade-off from I May will be an increase in ITP on a million euro home from 70,000 euros to 85,000 euros.
On the market in Mallorca:
Ref 5652, Villa in Santa Ponsa, Mallorca
A spectacular modern villa not only boasting views to the pretty bay of Santa Ponsa and the Malgrats islands but also with steps leading directly from the 1,210m² plot down to the sea’s edge – ideal for Mallorcan sunsets. Just moments from excellent golf courses restaurants, shops and cafes, this six bedroom 675m² home is flooded with natural light, luxuriously decorated and has an independent guest apartment as well as a gymnasium, sauna, Jacuzzi, cinema room and fresco-flanked swimming pool. Bedrooms – six
Bathrooms – six
Plot size – 1,210m²
Built area - 675m²
Price – 7.2 million euros (approx 5.92 million pounds)
For property in Mallorca or indeed Ibiza, visit mallorca-sothebysrealty.com.