One house, many numbers – what property in Mallorca really costs - what taxes, fees and ongoing charges buyers should realistically plan for
The view is of the sea, the appointment with the notary is done. What follows is less romantic – but crucial. Taxes, fees and ongoing charges accompany every property on Mallorca, sometimes visible, sometimes well hidden in the small print. Anyone who values property realistically thinks in three steps: costs on purchase, costs after purchase and what remains each year. This overview organizes the most important items for buyers on the Balearic Islands - objectively, comprehensibly and without arithmetic.
1. When buying: Which taxes apply immediately
Existing properties:
Property transfer tax (ITP) - When buying a second-hand property in the Balearic Islands, the property transfer tax ITP applies. It is calculated progressively and is based on the purchase price or the taxable value.
- up to 400,000 euros: 8%
- 400,001 – 600,000 euros: 9 %
- 600,001 – 1,000,000 euros: 10 %
- 1,000,001 – 2,000,000 euros: 12 %
- üover 2,000,000 euros: 13 %
The decisive factor is that this is a graduated rate, not a uniform percentage of the total price. This makes a noticeable difference, especially at higher purchase prices.
Stamp duty (AJD):
- In the Balearic Islands, 1.5 % on the notarized purchase price in principle.
Depending on the purchase price and contractual constellation, different rates may apply - a point that becomes relevant for higher-priced new builds.
New build or first occupation – VAT and stamp duty - Whoever buys directly from the builder does not pay ITP, but:
- VAT (IVA):
Generally 10% on residential properties. Garage parking spaces are included within the legal requirements.
2. After the purchase: additional handling costs
Depending on the type of property, there are other costs associated with the notary appointment. They may seem unspectacular, but they add up reliably:
- Notary fees for the notarization of the escritura
- Land registry costs for the entry in the Registro de la Propiedad
- Gestoría for formal processing (not mandatory, but obligatory)
- Legal review by a lawyer, strongly recommended for foreign buyers in particular
These items depend on the purchase price and vary depending on the complexity of the property. In practice, they are usually in the low single-digit percentage range, but are an integral part of the overall calculation.
3. Running costs: What owners have to pay every year
Property tax (IBI) - The IBI is levied by the respective municipality. It is based on the cadastral value, not the market value of the property. The amount and assessment rate vary from municipality to municipality – a fixed component of every annual statement.
Own use: taxation of „notional rent“ - Properties that are not rented out are also relevant for tax purposes. The tax office assumes a notional own use:
- Approach: 1.1% or 2% of the cadastral value
- Taxation depending on the tax status of the owner
This point is often overlooked, especially in the case of vacation properties that are not rented out
, but regularly appears in the tax return.Renting: Income tax on rental income
Those who rent out their property earn taxable income, the type and extent of taxation depends on whether the owner is a tax resident in Spain or not. Deductible costs, settlement intervals and obligations differ accordingly.
Communal costs and insurance - In residential complexes or urbanizations, the following are regularly added:
- Comunidad fees for maintenance, administration, technology, pool or garden
- Building insurance, often supplemented by liability and optional household contents
No taxes – but fixed components of the ongoing burden.
4. When selling later: Two points you should know
3-percent withholding for non-residents - If an owner who is not a tax resident in Spain sells the property, the buyer must withhold 3% of the purchase price and pay it to the tax office. This amount is later offset against the actual tax - but initially acts as a deduction from the sales proceeds.
Plusvalía municipal -In addition, the municipal value added tax may apply to the land portion. The amount and calculation depend on the municipality, holding period and valuation method and should be checked in good time.
Buying property in Mallorca is not a tax jungle – but neither is it a one-size-fits-all model. If you make a clear distinction between purchase costs, processing and ongoing obligations, you can keep an overview and calculate realistically. This is the difference between a beautiful property and a sustainable decision.
Editor's note:
Tax regulations can change and depend on the individual situation. Personal advice prior to purchase remains sensible - especially for new builds, rentals or non-resident status.
