Before you make an offer to buy a property in Mallorca it’s advisable to make a tax plan, not only to know what you will pay when you buy a property but also to foresee the taxes you will pay in the future.
Taxes arising from the purchase of a property in Mallorca.
The tax implications when you buy in Mallorca, will depend on whether it is a new property or if it is used one.
If you buy a new property, or one that has been completely renovated, i.e. when the seller is a promoter you will pay 10% IVA, Value Added Tax on the day of purchase.
Subsequently, within 30 days of signing the deed of purchase, you must pay 1.5% of “Actos Jurídicos Documentados” Spanish Stamp Duty Tax. If the value of the property it’s over 1.000.000€ the Spanish Stamp Duty Tax is 2%.
On the other hand, if the seller is a private who sells a used property, you will pay the Transfer Tax “Impuesto de Transmisiones Patrimoniales, ITP“. This tax, which must be paid within 30 days of purchase, is progressive:
- For the tranche from 1 euro to 400,000 euros, 8% of the value is paid.
- For the tranche from 400,001 to 600,000 euros, 9% of the value is paid.
- For the tranche from 600,001 to 1,000,000 euros, 10% of the value is paid.
- For the tranche from 1.000.001 to 2.000.000 euros, 12% of the value is paid.
- For the tranche above 2.000.0001 euros, 13% of the value is paid.
Annual tax for the possession of a property in Mallorca
.-IBI. “Impuesto de Bienes Inmuebles” This tax is paid annually to the Town Hall where the property is located.
.-Garbage Collection Rate. It is also collected by the Town Hall.
.-Incinerator Rate: Many municipalities collect it in conjunction with the garbage tax
Income Tax for non Residents
This tax (model 210) must be presented yearly, accruing on December 31st. You will liquidate the incomes of the property. i.e. rentals. But either if your are not renting it, you must present its annually and pay small amount depending of the value of the property.
As non resident you are going to be liable for your Spanish assets only. Rate variates depending the region and in case of Balears Islands where Majorca is Wealth tax rates range from 0.28% up to 3.45% depending of the value of the assets.
|Base payable from €||Full payment (€)||Remaining liquidable base up to €||Tax rate (%)|
|10.909.951,99||258.832,84||From now on||3,45|
But not any non resident pays it. Wealth tax will be paid only when you assets are more than 700.000 euros. So, if your assets in Spain value 800.000 euros, you will pay wealth tax for 100.000 (800.000- 700.000).
If you become resident in Spain then you will be liable for all worldwide assets. Despite of this residents has a allowance of 700.000 euros + another one of 300.000 for the value of their permanent residence.