top of page

Understanding Property Purchase Costs and Taxes in Mallorca: A Guide

Mallorca, with its stunning landscapes, Mediterranean climate, and vibrant culture, remains a top destination for property buyers. However, purchasing property here involves various costs and taxes that buyers need to be aware of. This comprehensive guide details the key expenses associated with buying property in Mallorca.

mathilde-cureau-MCufDMY10C4-unsplash.jpg

Property Purchase Price

The primary cost is the property purchase price, which varies based on location, type, and condition of the property.

Stamp Duty Tax

When purchasing property, buyers must pay a Stamp Duty, which varies based on the purchase price:

  • From €270,151.21 up to €1,000,000: 1.5%

  • Above €1,000,000: 2%

 

For new build properties, an additional 10% VAT is applied on the purchase price, making the total tax between 11.5% and 12%.

Property Transfer Tax (Impuesto de Transmisiones Patrimoniales - ITP)

For pre-owned properties, buyers are subject to the Property Transfer Tax (ITP), paid in brackets, which ranges from 8% to 13% depending on the purchase price, plus Stamp Duty:

  • From €270,151.21 up to €400,000: 8%

  • From €400,000.01 up to €600,000: 9%

  • From €600,000.01 up to €1,000,000: 10%

  • From €1,000,000.01 up to €2,000,000: 12%

  • Above €2,000,000: 13%

This means the total tax for a pre-owned property purchase can range from 9.5% to 15%.

Annual Property Tax (IBI)

After the purchase, property owners are required to pay an annual property tax (IBI). This is a relatively small fee that all property owners must pay each year.

Additional Costs

Lawyer Fees:
It is highly recommended to hire a lawyer to assist with the legal complexities of purchasing property. Lawyer fees can vary but typically range from €100 to €500 per hour.

Notary Fees:
Notary fees are calculated based on the property's value, complexity, and the number of pages in the deed. On average, these fees range from €500 to €1,000.

Land Registry Fees:
Once the purchase is complete, the property must be registered in the Land Registry. The fees for this process usually range from €500 to €1,000.

Mortgage Costs:
If the property purchase is financed through a mortgage, there will be additional costs associated with obtaining and maintaining the mortgage. These can include arrangement fees, valuation fees, and interest payments.

 

Conclusion

Understanding the various costs and taxes involved in purchasing property in Mallorca is crucial for making an informed investment. From Stamp Duty and VAT on new builds to Property Transfer Tax on pre-owned properties, along with annual taxes and additional legal and registration fees, potential buyers should budget for these expenses to ensure a smooth purchasing process. By being aware of these costs, you can better plan your investment and enjoy the benefits of owning property in this beautiful part of the world.

Should I Invest in Spain?

If you are asking yourself 'Should I invest in Spain?' and would like professional advice and guidance, contact Ebbens Official for a no-obligation discussion.

bottom of page