What taxes and costs will be incurred on the island in 2025?
Buying or selling a property in Mallorca not only involves the actual purchase price, but also a range of taxes and fees. While sellers mainly have to reckon with capital gains tax and municipal taxes, buyers have to pay land transfer tax, notary fees and other charges. The total costs vary depending on the location, property type and tax status of the parties involved. So that you are well prepared, we have summarized all relevant costs and taxes for 2025...WHAT COSTS ARE INCURRED BEFORE THE SALE PROCESS?Before a property can be officially sold, a number of documents are required. These formalities are required by law and incur additional costs.
| Cost type | DESCRIPTION | UNGEFÄHRE COSTS 2025 |
|---|---|---|
| Energy certificate | Mandatory since 2013, evaluates the energy efficiency of the property | 60 € – 130 € |
| Certificate of habitability | Mandatory in many regions, confirms minimum standards for housing |
60 € – 160 € |
| Excerpt from the land register | Proof of ownership and encumbrances of the property | 3.64 € – 9.20 € |
| Liquidation of the mortgage | Necessary if a mortgage still exists | 400 &euros; – 1,000 &euros; |
COSTS AT THE END OF THE SALES DEVELOPMENT
During the actual sales process, further costs are incurred, which may vary depending on the type of sale.
| COST TYPE | DESCRIPTION | UNGEFÄHRE COSTS 2025 |
|---|---|---|
| Payment contract | Securing the purchase process for both parties | 100 € – 400 € (with lawyer) |
| Notary fees | Notarization of the sale | 60 € – 160 € |
| Broker commission | Depending on the market and sales price | 3% – 6% of the purchase price |
WHICH TAXES MUST BE PAID AT THE TIME OF PURCHASE?
1. property transfer tax (Impuesto sobre Transmisiones Patrimoniales, ITP) Anyone who buys a second-hand property must pay the ITP. This varies depending on the Autonomous Community and amounts to between 8% and 13% of the purchase price in the Balearic Islands.
2. VAT and stamp duty (for new builds) When buying a new build property, VAT (IVA) of 10% of the purchase price is due instead. In addition, stamp duty (AJD) is levied, which is currently 1.5% in the Balearic Islands.
3. notary, land registry and administration fees These fees cover the registration of the property in the land registry and the preparation of the notarial deed of sale. They usually amount to 1% – 1.5% of the purchase price.
WHICH TAXES MUST BE PAID ON THE SALE? 1. income tax on the profit from the sale
If a property is sold at a profit, income tax is payable on it. The tax is only calculated on the difference between the purchase price and the sale price. The tax rates for 2025 are as follows:
2. municipal value added tax („Plusvalía Municipal“) and property tax (IBI)
This tax is levied by the municipality and is based on the increase in value of the property since the last sale. If the sales price is lower than the original purchase price, no capital gains tax is due.
The annual property tax (IBI) must be paid in the year of the sale and amounts to between 0.4% and 1.3% of the cadastral value of the property, depending on the municipality.
3. Tax for non-residents
If the seller is not a tax resident in Spain, the buyer must pay 3% of the purchase price directly to the tax office. This serves as an advance payment on the seller's income tax.
WHICH COSTS CAN BE DEDUCTIBLE DURING THE SALE? Certain expenses can reduce the tax burden. These include:| DECREASING FÄHIGH COSTS | CONDITIONS |
|---|---|
| Broker commission | Provable with invoice |
| Notary fees | Only for the seller's part |
| Conversions & renovations | If they are documented |
| Municipal capital gains tax | Only if demonstrably set too high |
This is how buyers and sellers save money
Tips for buyers:
• Comparison of the tax burden between new and old buildings: New buildings incur higher taxes, while used properties can be cheaper due to the real estate transfer tax.
• Advance planning of ancillary financing costs: Ancillary costs such as notary fees and land registry entry should be factored in before the purchase.Tips for sellers:
• Reinvestment of sales proceeds: If the money is invested in a new main residence within two years, tax exemption can be applied for.
• Negotiation of the property tax with the buyer: If the buyer agrees, the IBI can be split proportionally.
CONCLUSION: START THE REAL ESTATE MARKET WELL PREPAREDWhether you are a buyer or a seller, anyone entering the Mallorcan real estate market should be familiar with the tax and legal framework conditions. Good preparation and, if necessary, professional advice can help to optimize costs and make the purchase or sale efficient. Those who are well informed will save time and money.
