PROPERTY PURCHASE IN MALLORCA – INCIDENTIAL TAXES

In general the following taxes have to be considered by purchasing a property in Mallorca/Spain:

ITP REAL ESTATE TRANSFER TAX

In case a sale of a property is not subject to VAT the REAL ESTATE TRANSFER TAX (ITP) will be considered and has to be paid. The real estate transfer tax can vary in each autonomous region in Spain. Currently the real estate transfer tax has been ascertained by the Spanish government as follows :

  • up to 400.000 € purchase price: 8% real estate transfer tax
  • 400.000,01 € – 600.000 € purchase price = 9 % real estate transfer tax
  • 600.000,01 € – 1.000.000 € purchase Price = 10 % real estate transfer tax
  • as off 1.000.000  € = 11 % real estate transfer tax

Example: purchase price of a property > 1.000.000 €

In this case the according real estate transfer tax will be calculated as follows:

  • On the proportional amount of 400.000 € a tax load of 8 % = 32.000 €
  • On the proportional amount of 600.000 € a tax load of 9 % = 18.000 €
  • On the proportional amount of 1.000.000 € a tax load of 10 % = 40.000 €

Real estate transfer tax: 90.0000 €

VAT (VALUE ADDED TAX)

Is the property being sold by a business person or company 21 % VAT has to be paid on the sale of commercial properties or building plots. Properties such as new flats & houses going to be sold for the first time will be taxed with 10 %. In this cases an additional stamp duty tax of 1,2 % of the purchase price will be due as well.

IBI (Impuesto sobre Bienes Inmuebles) – PROPERTY TAX

The IBI – property tax – has to be paid once a year to the according town hall (deducted from your Spanish bank account together with the garbage rate). The IBI – property tax is calculated on the value of land according to the assessment of the local council. The basis of calculation varies depending on the municipality between 0,3 % up to 1,1 % of the cadastral value of the property.

INCOME TAX

Should you – as non resident – use your property by yourself an income tax has to be paid. 24.75 % income tax have to be paid on 1.1 % of the cadastral value of your property.

Example:

Cadastral value of 300.000 €

300.000 x 1,1% = 3.300 € x 24,75% = 816,75 € income tax

WEALTH TAX

Information on request!