Purchase Tax in Mallorca / By Balearic Properties

The tax landscape for purchasing property in Mallorca in 2024 remains consistent with the previous year, presenting both opportunities and obligations for prospective buyers. However, understanding these taxes can be your first step towards owning your dream home in this Mediterranean paradise. At Balearic Properties, we simplify the process so you can focus on what really matters: finding the perfect property.

Before making any offer on a property in Mallorca, it is crucial to establish a comprehensive tax plan that details the specific tax obligations you will face upon purchase. Such planning ensures that you are fully informed of both the immediate costs and the long-term financial responsibilities tied to the transaction, ultimately giving you peace of mind throughout your buying journey. 

"I don’t need the details; I just want to know the total amount payable."

If you prefer a straightforward calculation, you can contact us via email or use our contact form. Within a few hours, you will receive (free of charge and without obligation) a tax estimate for purchasing a property in Mallorca in 2024. Try our complimentary Tax Calculator Service for immediate insights and let us help you make informed decisions effortlessly.

Which Taxes to anticipate when buying a Property in Mallorca in 2024

The applicable taxes when buying a property in Mallorca depend on the type of property: is it a new construction or an existing dwelling?

New Builds and Fully Renovated Properties

If you are purchasing a new property, or one that has undergone full renovation by a developer, a 10% Value Added Tax (VAT, known as IVA in Spain) applies, which must be paid on the day of purchase. This is a straightforward way to secure a brand-new luxury villa or modern apartment, ensuring everything is up to date and ready for you to enjoy.

Existing Homes

For existing properties bought from a private seller, you will instead pay a Transfer Tax (Impuesto de Transmisiones Patrimoniales or ITP). The applicable rate depends on the purchase price, and this tax must be paid within 30 days of completing the sale. This often makes buying a charming traditional finca or townhouse even more attractive, as you can benefit from unique characteristics and lower tax implications.

In addition, a Spanish Stamp Duty Tax (Actos Jurídicos Documentados) is required. The standard rate is 1.5%, but for properties valued over €1,000,000, this increases to 2%. This tax must be paid within 30 days of signing the Purchase Deed. At Balearic Properties, we assist you throughout this process, ensuring you are aware of every step and helping to minimize your stress.

Tax Calculation Breakdown for Property Purchases

The total tax liability for purchasing property in Mallorca is determined using a tiered structure. Each tranche of the property value is subject to a different rate, as outlined below:

• For the tranche from €1 to €400,000, 8% of the value is payable.
• For the tranche from €400,001 to €600,000, 9% of the value is payable.
• For the tranche from €600,001 to €1,000,000, 10% of the value is payable.
• For the tranche from €1,000,001 to €2,000,000, 12% of the value is payable.
• For the tranche above €2,000,001, 13% of the value is payable.

These rates might seem complex, but the Balearic Properties team is here to guide you every step of the way, making sure there are no surprises.

Examples of Tax Calculations

Example 1: Purchase Price of €650,000

• For the tranche from €1 to €400,000, 8% = €32,000
• For the tranche from €400,001 to €600,000, 9% = €18,000
• For the tranche from €600,001 to €650,000, 10% = €5,000
• Total Tax Liability: €32,000 + €18,000 + €5,000 = €55,000

Example 2: Purchase Price of €2.5 Million

• For the tranche from €1 to €400,000, 8% = €32,000
• For the tranche from €400,001 to €600,000, 9% = €18,000
• For the tranche from €600,001 to €1,000,000, 10% = €40,000
• For the tranche from €1,000,001 to €2,000,000, 12% = €120,000
• For the tranche above €2,000,001, 13% = €64,999
• Total Tax Liability: €32,000 + €18,000 + €40,000 + €120,000 + €64,999 = €274,999

By breaking down these examples, you can see exactly what you will need to budget for. At Balearic Properties, we aim to make this process transparent so you can move forward with confidence.

Annual Taxes for Property Ownership in Mallorca

Owning a property in Mallorca is a dream come true, and understanding the annual taxes ensures there are no surprises. Below are the key annual taxes that apply:

1. Annual Property Tax (Impuesto de Bienes Inmuebles or IBI): This municipal tax is levied annually by the local town hall and is based on the cadastral value of the property. It’s a manageable cost that helps keep the island’s infrastructure running smoothly, ensuring your property remains part of a well-maintained community.
2. Garbage Collection Tax: This tax is collected by the local municipality to cover waste management services. It’s a small cost that contributes to Mallorca’s commitment to keeping the island clean and beautiful.
3. Incinerator Tax: In some areas, an additional tax is levied to cover waste incineration costs, often combined with the garbage collection tax. Again, this helps keep Mallorca’s environment pristine, one of the many reasons why so many people choose to make this island their home.
4. Income Tax for Non-Residents: If you are not a Spanish resident, you must file a non-resident income tax return annually (tax code 210). This tax applies to potential rental income, but even if the property is not rented, a notional income is assumed and taxed accordingly. Renting out your property can be a great way to generate income when you’re not using it, and we can help you understand how this tax applies.
5. Wealth Tax: Wealth tax applies to both residents and non-residents, but only on assets held in Spain. The Balearic Islands impose a wealth tax ranging from 0.28% to 3.45%, depending on the value of your assets. For non-residents, this tax only applies if your Spanish assets exceed €3,000,000. In such cases, you are only taxed on the value above this threshold. For Spanish residents, the wealth tax covers all global assets, with an allowance of €3,000,000 plus an additional €300,000 for the primary residence.

These annual costs are part of the privilege of owning property in one of the most beautiful locations in the world. Our team at Balearic Properties is here to assist you in navigating these responsibilities, ensuring your property ownership experience is as seamless and enjoyable as possible.

It is highly advisable to consult with a tax specialist to fully understand your specific obligations and to ensure compliance with all Spanish tax regulations. At Balearic Properties, we connect you with trusted professionals who can help you optimize your tax planning and make owning property in Mallorca as rewarding as possible.

Owning a home in Mallorca isn’t just a financial investment—it’s an investment in a lifestyle that offers beauty, relaxation, and unforgettable experiences. Let us help you make this dream a reality.