Property in Mallorca - costs, fees and taxes
Everything you need to know about buying property in Mallorca
Tips for a better understanding of property costs, fees and taxes
NOTARY AND PROPERTY REGISTRY FEES
After granting the public deed the fees of the notary have to be paid, whereby the originals of the deed are provided for its registration in the Property Registry. Before this, the taxes related to the operation and the municipal taxes have to be paid.
After buying the property it is recommended that you change the bearer of all the bank direct debits regarding the supplies related to the property, in order to avoid default on payments and the related complications. The estate agent or your lawyer can take care of this.
The vendor will provide the last utility bills (water, gas, electricity, telephone, etc.) to the purchaser. Our office provides the service of change of ownership.
Only payable if you are represented by a lawyer who is normally recommended. Lawyers’ fees are normally between 0,5 and 1,0 % of the purchase price.
(Real Estate Transfer Tax or VAT “Value added Tax”)
Once the completion has taken place in front of the Notary, the following taxes must be paid by the buyer:
Real Estate Transfer Tax
This tax is levied on the sale of second-hand properties or subsequent transmissions.
The deadline for the settlement and payment of taxes is one month from the date of the granting of the public deeds.
The tax rate will change according to the Autonomic Community and the base of calculation is the purchase price that appears in the deed.
In the Balearic Islands the payable amount is obtained by applying onto the taxable base (value of the Property fixed on the deeds) the rate resulting from the following schedule:
From January 1st, 2013. Base of the tax Applicable rate
0,00€ to 400.000€ 8%
400.000€ to 600.000€ 9%
From 600.000€ and above 10%
*Garage places not attached to housing, a maximum of two per property are taxed with 8% on a value of 30.000 € and 9% exceeding that amount.
Value added Tax (VAT)
The VAT is levied on the first transfer of real estate objects, meaning the tax is only applied on properties of new construction and first transmission. At present the applicable rate is 10% on the purchase price.
For all other transfers of real estate objects subject to VAT (business premises, warehouses, garages, which are not transferred together with the dwelling, plots, etc..) the general VAT is changed to 21%.
The buyer must remunerate the vendor at the time of the transmission of the property.
Stamps Duty Tax
The moment of the transmission of a property, subject to VAT by public deed, the buyer is obliged to pay the STAMP DUTY TAX to the Balearic Tax Agency, which since January 2013 is generally 1.2 % of the purchase price. This tax must be paid within one month starting from the date of the signature of the public deed of sale.
TAXES ASSOCIATED WITH THE POSSESSION OF A PROPERTY
PROPERTY TAX (IBI)
Owners of property in Spain (residents and non residents) must pay an annual property tax to the corresponding local Town Hall.
The amount payable is worked out by each municipality based on the cadastral value of the property in question and a tax rate is issued by the Town Hall.
The cost will vary but normally it is between 150€ and 200€ per annum depending the size of the property.
Wealth tax has temporarily been put in place again for the years 2011, 2012 and 2013, accruing on December 31st each of these years. The tax rate ranges from 0.2% to 2.5%, depending on the scale of the tax.
INCOME TAX FOR NON-RESIDENTS
If the property is purchased by a non-resident, a tax declaration must be presented yearly, accruing on December 31st every year. The income to declare depends on the destination given to the property.