Clarity when buying – the taxes you'll face on Mallorca.

The dream of your own home on Mallorca is within reach – maybe you've already set your sights on a finca or a townhouse. But before you sign the purchase contract, it pays to take a calm look at the taxes involved. Beyond the purchase price, a handful of one-time and recurring payments are part of the picture.

Don't worry: with a clear overview and realistic expectations, the buying process can stay relaxed and secure. Here's what you should expect tax-wise.

Heads-up: Tax rates on the Balearics change from time to time. We list the current figures here – for your specific case, we're happy to connect you with a Mallorca-based tax advisor.

1. One-time taxes at purchase

Transfer Tax (ITP)

If you buy an existing property – a resale home or apartment – the Balearic Property Transfer Tax (Impuesto de Transmisiones Patrimoniales, or ITP) applies. The rate is tiered by purchase price:

up to €400,000: 8%

€400,000.01 to €600,000: 9%

€600,000.01 to €1,000,000: 10%

€1,000,000.01 to €2,000,000: 12%

above €2,000,000.01: 13%

ITP must be paid within 30 days of the notarial deed.

Value Added Tax (IVA)

If you purchase a newly built property directly from a developer (first occupancy), you pay 10% VAT (IVA) on the purchase price instead of ITP – this also applies to up to two underground parking spaces per residential unit.

For land or commercial real estate, the VAT rate is 21%.

Stamp Duty (AJD)

On top of that, a stamp duty (Impuesto de Actos Jurídicos Documentados, or AJD) applies, also regulated at the Balearic level:

1.5% of the purchase price

for a purchase price above €1,000,000: 2%

It must be paid within one month of signing the notarial deed. AJD also applies when registering a mortgage – in that case, however, the lender pays it.

Important: Transfer tax and VAT never apply at the same time – it's always one or the other, depending on the property type.

2. Recurring annual taxes

Property Tax (IBI)

The Spanish property tax (Impuesto sobre Bienes Inmuebles, or IBI) is calculated annually based on the cadastral value. Depending on the municipality and property type, it ranges between 0.4% and 1.1%. The exact amount comes from your local town hall.

Income tax on personal use

If you use your property only privately as a non-resident – for vacations, for instance – Spain levies a tax on the fictitious benefit of that use. Specifically, you pay 19% on 1.1% of the cadastral value.

"Taxes aren't a reason to walk away from a purchase. They're a reason to do the math up front, instead of being surprised later." – Stephan Elders, Marketing & Strategy

Example:

Cadastral value: €500,000

1.1% of cadastral value: €5,500

19% of that (fictitious income tax for personal use): €1,045 per year

Income tax on rental

If you rent out your property as a non-resident, you pay 19% on rental income. Good news: you can deduct many expenses – mortgage interest, utilities, repairs, insurance, even a 3% annual building depreciation.

The essentials at a glance

Resale property: ITP, tiered from 8% to 13%

New build / first occupancy: 10% VAT on residential, 21% on land and commercial

Stamp duty (AJD): 1.5% – or 2% above a purchase price of €1,000,000

IBI – annual property tax: 0.4% to 1.1% of cadastral value, depending on municipality

Income tax on personal use: 19% on 1.1% of the cadastral value

Income tax on rental: 19% on rental income – many costs deductible

And most importantly

We're happy to stand by your side and connect you with experienced English- or German-speaking tax advisors and lawyers on the island. So you can move forward toward your Mallorca dream with a calm feeling.