Buying a property in Ibiza
How the process works

Finding the Right Property

For many people, owning a house or apartment in Ibiza is a dream. Finding the right property, however, is not always straightforward. Good properties are in high demand, and some of the most interesting opportunities are marketed discreetly or never advertised publicly at all.

Thanks to our many years of experience in Ibiza and our extensive network, we have access to a large part of the island’s property market. This includes off-market properties that do not appear on public property portals or real estate agency websites.

Working with us can therefore give you access to a broader range of opportunities and help you focus on properties that genuinely match your requirements.

Share your search criteria with us without any obligation. We will look specifically for suitable properties and curate a personalized selection for you. Our search service is completely free of charge for buyers.

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However, for us, real estate brokerage on Ibiza means more than just finding the right property.

Initial Assessment of the Planning and Legal Situation

Many existing properties in Ibiza come with planning or legal issues that should be considered carefully. Not all parts of a property are always fully authorised, and in some cases the actual use of the property may not correspond with its legal status.

We provide you with an initial assessment of these issues before you invest too much time in a property. This helps you avoid pursuing properties whose planning or legal situation does not meet your expectations.

Where the circumstances are more complex, legal questions remain unresolved or you would simply prefer legal representation, we can recommend a lawyer familiar with property law in Ibiza.

Support During Price Negotiations

The buyer’s and seller’s price expectations are often quite different.

Sellers often have a strong emotional attachment to their house or apartment. They may have invested a great deal of time and care into the property and associate it with many happy memories. Naturally, they would like this to be reflected in the price.

Buyers, on the other hand, are investing a substantial amount of money and want to be confident that they are making a sound investment and buying at a fair price. 

With our experience, our knowledge of the local market and our understanding of different expectations and negotiating styles, we can mediate between both sides and help maintain a constructive and positive basis for discussion, even when price expectations are initially far apart.

Buying a Property in Ibiza: How the Process Works

Once the buyer and seller reach an agreement, a contract of sale is concluded

When does a property purchase become legally binding?

In Spain, a property purchase agreement does not generally need to meet specific formal requirements to be legally valid. In theory, a buyer and seller can even reach a binding agreement with a handshake, provided they agree on the property and the price and intend to be legally bound. A verbal agreement can therefore create obligations for both parties.

Relying on a verbal agreement is not advisable, however, as it can be difficult to prove exactly what was agreed. The usual approach is to formalise the purchase by signing a public deed of sale, known as the “escritura pública de compraventa”, before a Spanish notary. This deed also provides the basis for registering the buyer’s ownership with the Spanish Land Registry.

Once a valid purchase agreement is in place, ownership generally passes when the property is handed over, typically when the buyer pays the purchase price and receives the keys. 

The arras agreement: purchase terms and deposit

Once the buyer and seller have reached an agreement, the usual next step in Ibiza is to sign a private agreement known as a “contrato de arras”. This sets out the purchase price, the deposit, the deadline for signing the public deed of sale and any conditions that still need to be met.

The deposit is usually ten per cent of the purchase price, although a different amount can be agreed. It is credited towards the price when the purchase is completed.

Although often described as a preliminary agreement, an arras agreement creates binding obligations as soon as it is signed. The consequences of withdrawing or failing to fulfil those obligations depend on the type of arras agreed.

Arras penitenciales: the usual arrangement

The form commonly used in Ibiza is “arras penitenciales”. It allows either party to withdraw from the purchase under the agreed contractual terms. If the buyer withdraws, they lose their deposit. If the seller withdraws, they must repay twice the deposit received. For example, a deposit of €50,000 would require a total repayment of €100,000.

This right to withdraw must be clearly agreed. Simply calling the document an “arras agreement” is not enough.

Arras confirmatorias: a binding commitment to buy and sell

With this arrangement, the deposit confirms the purchase agreement and acts as part-payment of the price. Neither party has an automatic right to walk away by forfeiting or repaying the deposit. If one party breaches the agreement, the other can generally seek to enforce the purchase, including through the courts, or seek termination and damages where the legal requirements are met.

Arras penales: an agreed contractual penalty

This arrangement provides for a financial penalty if either party breaches the agreement. Paying the penalty does not generally give that party the right to walk away from the purchase. Whether the other party can demand both performance of the contract and payment of the penalty depends on the express terms agreed.

The wording of the agreement therefore matters. If you need financing or if property checks are still outstanding, any conditions protecting your position should be clearly agreed before you sign.

Signing before the notary and paying the purchase price

The public deed of sale is signed at the notary’s office. The outstanding purchase price is usually paid at the same appointment, and the keys are handed over. In a standard transaction, payment, the transfer of ownership and handover of the property take place together.

The payment method is agreed in advance with the seller, the notary’s office and, where necessary, the banks involved.

Bank cheque

An established payment method is a bank-issued cheque, known as a “cheque bancario”, which is handed over at the signing. Arrangements for the bank to issue the cheque must be made in good time.

Bank transfer

Payment can also be made by bank transfer. The timing and confirmation of payment need to be coordinated so that both parties can proceed securely. An instruction to transfer funds does not, on its own, confirm that the money has reached the seller’s account.

Funds deposited with the notary

Some notaries in Ibiza offer a facility known as a “depósito notarial”. This allows the buyer to transfer the purchase funds to a designated account held by the notary before the signing appointment. The conditions for releasing the money are agreed in advance.

The advantage is that receipt of the funds has already been confirmed when everyone meets to sign. The money is then released according to the agreed conditions. This can make the payment process easier to coordinate and the appointment more relaxed for both buyer and seller.

We are happy to help you draw up the arras agreement and prepare for signing the deed of sale before the notary. 

Registration with the Land Registry

Registration with the Land Registry confirms the transfer; it is not a prerequisite for ownership to pass. The transfer can take place before a notary, but it is also possible without a notary’s involvement.

What taxes and purchase costs should you budget for?

In addition to the purchase price, you should allow for taxes and the costs of completing the transaction. The main tax distinction is between buying a resale property and buying a new home from a developer.

Resale properties: property transfer tax

The purchase of a resale property is generally subject to Spanish property transfer tax, known as “Impuesto sobre Transmisiones Patrimoniales”, or ITP. The standard rates in the Balearic Islands are:

Portion of the property value used for tax purposes

Tax rate

Up to €400,000: 8%

Above €400,000 up to €600,000: 9%

Above €600,000 up to €1,000,000: 10%

Above €1,000,000 up to €2,000,000: 12%

Above €2,000,000: 13%

The tax is calculated progressively, with each rate applying only to the portion within that band. For example, a taxable value of €1 million results in transfer tax of €90,000, while a taxable value of €2 million results in tax of €210,000. Relief may be available for certain purchases of a main residence, subject to specific conditions.

The property’s official tax reference value, known as the “valor de referencia”, also needs to be checked. If it is below the purchase price, it will not normally affect the calculation. If it is higher, that higher reference value generally applies. It is different from the ordinary cadastral value and should be checked before you buy.

New homes: VAT and stamp duty

The first taxable sale of a new residential property by a developer is generally subject to Spanish VAT, known as IVA, at ten per cent instead of property transfer tax.

Stamp duty, known as “Actos Jurídicos Documentados”, or AJD, is payable in addition. The standard rate in the Balearic Islands is 1.5 per cent. For properties with a relevant value of €1 million or more, the rate is two per cent on the full taxable amount. This tax is separate from the notary’s fees.

Different tax rules may apply to land, commercial property and certain other transactions.

Other purchase costs

You should also allow for the notary’s fees for the deed of sale and the fees for registering your ownership with the Land Registry. These are governed by statutory fee schedules, and the amount depends on factors including the property’s value and the work required. The agreement sets out how the costs of the purchase are shared between the parties.

Depending on the services you require, additional costs may include legal advice, administrative assistance from a gestoría, property surveys, powers of attorney, translations and banking services. If you are taking out a mortgage, you should also allow for relevant financing costs, such as a property valuation. Any estate agency fee payable by the buyer should be clearly agreed in advance.

Buying from a seller who is not tax-resident in Spain

If the seller is not tax-resident in Spain, the buyer must generally withhold three per cent of the purchase price attributable to that seller and pay it to the Spanish tax authority. This is deducted from the amount paid to the seller and serves as an advance payment towards the seller’s tax liability. It is not an additional purchase tax for the buyer.

The municipal tax on increases in urban land value, known as “Plusvalía municipal”, also needs to be addressed. This is generally the seller’s tax responsibility. However, where the seller is an individual who is not resident in Spain, the buyer becomes liable to the municipality in the seller’s place. Payment should therefore be secured as part of the transaction, for example through an agreed retention from the purchase price.

After the purchase

Once the deed has been signed, the remaining steps include dealing with the tax formalities and registering your ownership with the Land Registry. Utility accounts and, where applicable, the owners’ association records also need to be updated.

We guide you from finding the right property through to handover and help coordinate each stage. You will know in advance which documents are needed, what decisions you need to make and which costs to expect.

Our support also extends to practical matters after the purchase. If needed, we can help you organise your move and settle into your new home.

Applying for your NIE in good time

As a foreign buyer, you will need a Spanish identification number for the tax formalities and registration of your ownership. This is known as the “Número de Identidad de Extranjero”, or NIE, and also serves as your Spanish tax identification number.

You can apply in person to the relevant authority in Spain or through the Spanish consulate responsible for your place of residence. Alternatively, an authorised representative, such as a lawyer or a gestoría, an administrative services firm, can handle the application on your behalf. Your notary’s office may also be able to help arrange this.

Appointment availability and processing times vary, so it is best to apply well before the planned signing date. We are happy to help with the application process if needed.

Are you looking to buy a property in Ibiza? 

Share your search criteria with us. We will be happy to help you find the perfect house or apartment, free of charge and without any obligation.

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Ibiza Real Estate