5 Key Taxes You Need to Know Before Buying Property in Mallorca in 2025

Understanding Property Taxes When Buying a Property in Mallorca in 2025

Purchasing a property in Mallorca, one of Spain’s most sought-after real estate destinations, is an exciting investment—whether you’re buying a charming finca in the countryside, a modern apartment in Palma, or a luxury villa by the coast. However, understanding the tax obligations that come with buying property in Mallorca is essential to avoid any unexpected financial surprises.

In 2025, as the Mallorca real estate market continues to evolve, buyers should be aware of the various taxes and fees involved in the property purchasing process. This guide outlines the key property taxes you need to know when buying in Mallorca, so you can make an informed decision and plan accordingly.

Property Transfer Tax (ITP) or VAT (IVA)

The Property Transfer Tax (Impuesto de Transmisiones Patrimoniales – ITP) is one of the main taxes buyers will need to pay when purchasing a resale property (i.e., an existing property rather than a new one). In 2025, the ITP tax rates are expected to remain in the range of 8% to 10% depending on the purchase price:

- 8% for properties valued up to €400,000
- 9% for properties between €400,000 and €600,000
- 10% for properties over €600,000

For new properties (i.e., newly built or those that have not been previously sold), buyers will pay Value Added Tax (IVA) instead of ITP. The standard VAT rate for new properties in Mallorca is 10%. It’s worth noting that this tax is usually included in the listed price of the property, but it’s essential to clarify this with the seller or your real estate agent to avoid surprises.

Stamp Duty (AJD)

In addition to the ITP or IVA, there’s also the Stamp Duty (Actos Jurídicos Documentados – AJD), which applies when purchasing a property in Mallorca. This is a tax on the official documentation used during the sale process, including the deed of sale.

For resale properties, the AJD tax is typically between 0.5% and 1.5% of the purchase price, depending on the region and specific conditions. In some cases, the AJD tax is capped, so it’s important to check the latest rates with a local notary or lawyer before closing the deal.

For new properties purchased from a developer, AJD is usually not applicable, as it’s covered under the IVA tax.

Notary Fees and Registration Fees

In Spain, every property transaction must be formalized before a notary. Notary fees are typically between 0.1% and 0.3% of the property’s purchase price, though this can vary depending on the complexity of the transaction. This fee is paid by the buyer, and it’s a necessary step in making the sale official.

Additionally, after the deed of sale is signed, the property must be registered in the Land Registry (Registro de la Propiedad). Registration fees vary depending on the property value, but they are typically between 0.1% and 0.5% of the purchase price.

Plusvalía Tax (Capital Gains Tax on Land Value)

The Plusvalía Tax is a local tax based on the increase in the value of the land where the property is located. This tax is paid by the seller, but it’s important for buyers to be aware of this charge because it may affect the overall purchase cost.

The tax is calculated based on the difference between the value of the land at the time of purchase and its value when it’s sold. The exact amount depends on the municipality in which the property is located. Typically, the Plusvalía tax applies to properties in urban areas and can vary significantly.

While the buyer is not responsible for paying this tax, you may want to confirm that the seller has settled it before you finalize your purchase to avoid any complications later.

Property Ownership Taxes (IBI)

Once the property is purchased, you will be responsible for paying annual Property Tax (Impuesto sobre Bienes Inmuebles – IBI), which is a local tax levied by the municipality. The IBI is based on the cadastral value of the property (which is usually lower than the market value) and is charged annually.

The IBI rate typically ranges between 0.4% and 1.1% of the cadastral value of the property, depending on the location. For example, the rate tends to be higher in cities like Palma, but it can be lower in rural areas. The tax is paid directly to the local town hall, and the amount will vary depending on your property’s size, location, and value.

Wealth Tax (Impuesto sobre el Patrimonio)

Spain imposes a Wealth Tax on the net value of an individual’s assets, which includes real estate. However, non-residents are only subject to Wealth Tax on assets located in Spain, such as your property in Mallorca.

As of 2025, the Wealth Tax rates in Spain range from 0.2% to 3.5% for net assets exceeding €700,000. There are exemptions for primary residences, which can be significant, but the specifics depend on the regional government. For example, Balearic Island residents are entitled to a €700,000 exemption, meaning that you would only be taxed on the value of your property over this amount.

If you’re purchasing property as a second home or investment, the Wealth Tax could be a consideration depending on the value of your assets.

Income Tax on Rental Income

If you plan to rent out your property in Mallorca, you will be subject to income tax on any rental income you earn. Non-resident property owners must pay tax on their rental income at the rate of 19% for EU residents and 24% for non-EU residents. If you’re renting out your property on a long-term basis, you’ll also need to account for any additional administrative costs or tax responsibilities related to tenants.

For short-term rentals, such as holiday lets, special regulations and taxes apply, including the need for a tourist license from the local authorities.

Conclusion: Preparing for Property Taxes in Mallorca in 2025

When buying a property in Mallorca in 2025, it’s important to factor in the various taxes and fees involved in the process. From Property Transfer Tax (ITP) to Stamp Duty (AJD), notary and registration fees, plus ongoing taxes like IBI and Wealth Tax, being informed will help you budget accurately and avoid any unexpected surprises.

Consulting with a local real estate agent, lawyer, and accountant can ensure you understand all your obligations and allow you to make your property purchase in Mallorca as smooth as possible. Understanding these taxes is a crucial part of the buying process and will help you navigate Mallorca’s real estate market with confidence.