Tax considerations for foreign buyers

Tax information checked: 18 September 2026. Balearic regional purchase-tax figures below have been cross-checked against the current Agència Tributària de les Illes Balears (ATIB) guidance and the June 2026 legislative update. Tax treatment depends on personal circumstances; independent advice remains essential.

Buying a home in Mallorca, Ibiza or Menorca is refreshingly open to international buyers — there
are no restrictions on foreign ownership, and the purchase process itself is well established. What
catches many buyers off guard is not the purchase itself, but everything the Spanish tax system
expects from them afterwards: the taxes due at completion, the ones due every single year they own
the property, and the ones due if they eventually sell. This guide sets out what those actually are.

This is general information, not personalised tax advice. Rates and thresholds are reviewed
periodically by both the national and Balearic tax authorities — always confirm current figures with
an independent tax advisor (asesor fiscal) or gestor before signing anything.

1. Taxes due when you buy

For a step-by-step walkthrough of the purchase itself — NIE number, reservation contract, arras,
notary completion — see our Balearic Islands Buying Guide.
This section focuses only on what you pay to whom.

Resale property: Impuesto de Transmisiones Patrimoniales (ITP)

Resale homes in the Balearic Islands are taxed under ITP, a regional transfer tax applied on a
progressive scale rather than a single flat rate. As checked in September 2026, ATIB publishes the following general progressive scale for transfers of real estate. See the current ATIB ITP rates:

Portion of the price	Rate
Up to €400,000	8%
€400,000 – €600,000	9%
€600,000 – €1,000,000	10%
€1,000,000 – €2,000,000	12%
Above €2,000,000	13%

The tax is calculated by tramos — each portion of the price is taxed at its own bracket rate, not
the whole price at the top rate. Reduced rates and bonifications exist for qualifying purchases of a habitual home, but the eligibility rules are specific. Following the June 2026 changes, ATIB confirms that the maximum property-value threshold used for certain housing tax benefits is €331,859.70 in Mallorca and Menorca and €378,211.68 in Ibiza and Formentera for taxable events from 14 June 2026. The benefit itself may apply only to a defined portion of the tax base and depends on conditions such as age, first-home status or family circumstances. See the ATIB June 2026 update and confirm eligibility with your advisor before relying on a reduced rate or bonification.

New-build property: IVA + AJD

New-build homes bought directly from a developer are taxed differently: 10% VAT (IVA) plus AJD
(stamp duty), generally 1.5% in the Balearic Islands — together broadly in line with what’s outlined
in our Buying Guide. Reduced AJD rates and exemptions can apply to specific categories of buyer, so
treat this as a starting estimate rather than a quote.

Other one-off costs

Budget separately for notary fees, land registry fees and your lawyer’s fees — together these
typically add another 1–2%, on top of the tax itself.

2. Taxes due every year you own the property

This is the part that surprises many overseas owners: even if you never rent the property out, a
non-resident owner can still have an annual Spanish tax liability, through imputed rental income.

IBI — the local property tax

Impuesto sobre Bienes Inmuebles is the Spanish equivalent of council tax, billed annually by the
town hall (ayuntamiento) and based on the property’s cadastral value. The rate is set locally, so it
varies by municipality — your notary or gestor will confirm the exact amount for the specific
property before completion.

IRNR — non-resident income tax

If you’re not a Spanish tax resident, you must file an annual non-resident tax return (Modelo 210)
even when the property earns no income. Spain treats a second home as generating “imputed income” —
a notional rent set at 1.1% of the property’s cadastral value (2% if that value hasn’t been officially
revised in the last decade or so) — and taxes it accordingly:

• 19% for tax residents of the EU, Iceland, Norway and Liechtenstein
• 24% for everyone else, including UK residents post-Brexit

If you do let the property out, actual rental income is taxed at the same rates — but with an
important asymmetry: EU/EEA owners can deduct expenses directly tied to the rental (management fees,
repairs, community fees for the let period); non-EU owners generally cannot, which meaningfully
changes the net return for British, American and other non-EU landlords.

3. Taxes due when you eventually sell

If you’re a non-resident seller, two separate charges apply — Spanish tax residents follow a
different regime (via their regular IRPF return) and aren’t subject to either of these:

• 3% withholding — the buyer is legally required to withhold 3% of the sale price
  and pay it directly to the tax office on your behalf (Modelo 211), as a deposit against your
  eventual capital gains bill.
• 19% capital gains tax on the actual profit, calculated once your final tax
  return is filed — if the 3% withheld turns out to be more than you owe, the difference is refunded;
  if it’s less, you settle the balance.

Separately, the seller (not the buyer) is also usually liable for plusvalía municipal, a local tax
on the increase in the land’s cadastral value over the ownership period. It’s set by each town hall
individually, so there’s no single figure to quote here — your gestor calculates it at the point of
sale.

A note on wealth tax

This is where high-value buyers should pay closer attention. Owning property in Spain above
certain thresholds can bring you into scope for Impuesto sobre el Patrimonio (wealth tax) and,
depending on the size of your worldwide assets, Spain’s Temporary Solidarity Tax on Large Fortunes.
Exemptions differ significantly by residency status and by autonomous community — the Balearic
Islands, for residents, currently apply a considerably higher exempt minimum than most of Spain — so
this is genuinely case-by-case. For anyone buying at the upper end of the market, we’d recommend
sitting down with a tax advisor before completion, not after.

Getting it right from the start

None of this is a reason to be cautious about buying in the Balearics — it’s simply the paperwork
that comes with owning property in a country that isn’t your own. Every buyer we work with is
connected with an independent lawyer and tax advisor as part of the process, precisely so there are
no surprises at completion or at tax time the following spring.

Get in touch with our team for
personalised guidance on your specific situation.