When buying property on Mallorca, it’s especially important to consider and calculate the acquisition taxes, namely the property transfer tax or value-added tax, and the stamp duty. More on this below in the text.
In addition to the acquisition taxes, there are other additional purchase costs such as for the notary, land registry, gestoría, and possibly for a lawyer.
- Notary Fees
The fees of the Spanish notary are based on a binding fee schedule and range from 0.1% to 0.3% of the purchase price. Additional fees are charged for extra copies and translations. - Registry Fees
The property register (land registry) also has a binding fee schedule. Here, you should calculate fees between 0.1% and 0.2% of the certified purchase price for the entry. - Gestoría Fees
Unlike in Germany, the notary in Spain does not oversee the purchase process and entry after certification. In Spain (if no lawyer is appointed), this is done by an administrative firm, known as a gestoría. For example, the gestoría handles the payment of property transfer tax and legal transactions with the property register (deletions and entries). For this, processing fees between approximately €500 and €2000 (depending on the complexity of the case) are incurred. - Lawyer’s Fees
Lawyers specialized in real estate sales usually agree on a fee of around 1% of the purchase price for their services, depending on the complexity. For more complicated structural issues, such as clarifying inheritance and family law issues or cross-border tax issues, the fee may also be above this average rate.
Property Transfer Tax
For the purchase of a used property, a property transfer tax (ITP) is due. The determination of the amount of the property transfer tax is the responsibility of the individual regional authorities. On the Balearic Islands, the following property transfer tax applies for the purchase of a used property:
- The first €400,000 of the purchase price is taxed at 8%
- Between €400,000.01 and €600,000, the property transfer tax is 9%
- The amount between €600,000.01 and €1,000,000 is taxed at a rate of 10%
- The purchase price between €1,000,000.01 and €2,000,000 is taxed at 12%
- The purchase price over €2,000,000.01 is taxed at 13%.
Sample Calculation with a Purchase Price of €1,500,000
- Up to €400,000 tax burden 8% = €32,000
- For the amount between €400,000.01 and €600,000, 9% is due = €18,000
- On the amount between €600,000.01 and €1,000,000, 10% is due = €40,000
- For the amount from €1,000,000.01 to €1,500,000, it is 12% = €60,000
Total tax burden thus €150,000
The tax is to be paid within 30 days after the transfer of ownership.
Value-Added Tax
While the purchase of a used property is subject to property transfer tax, the purchase of a newly constructed property is subject to value-added tax (IVA). The applicable tax rate depends on the type of property: For residential properties including garage spaces (max. 2 per housing unit), 10% IVA is charged on the purchase price.
For the purchase of land from a business or for commercial properties, the tax rate is 21%. Property transfer tax and value-added tax are never cumulative but always alternative.
Stamp Duty
On the Balearic Islands, since January 1, 2023, it is now 1.5%. For a purchase price over €1,000,000, the tax rate of the deed or stamp duty increases to 2%. The deadline for paying the stamp duty is 1 month after signing the notarial deed. Stamp duty is also levied on the creation of mortgages, but due to changes in the law since 2018, it must be paid by the lender. Proof of payment of the stamp duty is a prerequisite for the entry of the notarial deed in the land registry.
This is a machine translation of the German article.