The Complete 2025 Property Tax Guide for Owners and Buyers in Mallorca

If you are looking to buy a property in Mallorca and you wonder what will be your tax obbligation at the moment you become an owner on the island? Beyond the purchase price, you’ll encounter a range of taxes and obligations that vary depending on whether you’re buying, holding, renting, or selling your home.

For many international owners, Spanish property taxation can feel complex at first glance, in fact, regional taxes differ from national ones, rules apply differently to residents and non-residents, and what about your obligations?

They don’t end once you’ve signed at the notary. Missing a detail can lead to unexpected costs or even penalties.

The good news? With the right guidance, Mallorca’s tax system is predictable and manageable. By understanding what applies to you, you can plan ahead, optimize costs, and focus on enjoying your property.

At Mallorca Select, we’ve spent over 15 years helping clients navigate not only the property purchase process but also the responsibilities of ownership. In this guide, we’ll walk you through the key taxes every owner should know about in 2025 — from purchase costs to annual obligations and selling scenarios. And while we always recommend working with a specialist tax advisor, this guide will give you the clear foundation you need to make informed decisions.

One-Off Taxes at Purchase — What You Actually Pay

When you buy a property in Mallorca, two main tax types apply depending on whether it's resale or a new build. Let’s break them down clearly, with up-to-date 2025 figures and practical insight.

Buying a Resale Property: ITP (Impuesto sobre Transmisiones Patrimoniales)

This is the standard tax for second-hand properties. In the Balearic Islands (which includes Mallorca), the rates are tiered Progressively:

• Up to €400,000: 8%

• €400,001–€600,000: 9%

• Above €600,001: 10%

A regional guide also indicates ITP broadly ranges between 8% and 13%, depending on property value and local adjustments. But the structured bracket above is the most common scale used in Mallorca.

Buying a New-Construction Home: VAT (IVA) + Stamp Duty (AJD)

If you're purchasing directly from a developer, the tax rules differ:

• VAT (IVA): 10% of the purchase price (residential property)

• Stamp Duty (AJD): around 1.2% in the Balearic Islands

Example: On a €1 million new-build, you'd pay €100 k in VAT plus roughly €12 k in AJD.

Speaking about Budgeting, you should plan for 8–10% in added costs on top of the purchase price for resale homes, and around 11–12% if buying new-builds (excluding additional fees like notary, registry, legal, and tax agent costs).

If you're applying for a mortgage, factor this into how much liquidity you’ll need—especially when banks often finance only up to 80% of the appraised value.

Mini Case Example: €5 Million Villa in Mallorca

Let’s compare the two scenarios — buying a resale villa versus a new-build villa at the same price point.

Scenario 1: Resale Villa (€5,000,000):

• ITP: approx. €500,000 (10% on values above €600,000)

• Notary, registry & legal fees: ~€25,000–€40,000

• Total upfront taxes & fees: around €525,000–€540,000

Scenario 2: New-Build Villa (€5,000,000):

• VAT (IVA): €500,000 (10%)

• AJD (stamp duty): €60,000 (1.2%)

• Notary, registry & legal fees: ~€25,000–€40,000

• Total upfront taxes & fees: around €585,000–€600,000

Annual Property Ownership Taxes in Mallorca

Owning a property in Mallorca means managing a consistent tax load that varies depending on your residency status and the property’s use. The following section will highlights all what you need to know about Property Ownership Taxes updated for the year 2025:

Local Real Estate Tax (IBI)

• What it is — A municipal tax based on the cadastral value of your property (usually much lower than its market value).

• Rates in Mallorca — Generally range from 0.4% to 1.1%, with the average around 0.5%.

• When it’s paid — Annually, often around mid-year. Each municipality may vary on exact dates.

For a property with a cadastral value of €1M, expect roughly €5,000 in annual IBI.

Non-Resident Property Tax (IRNR – Imputed Income)

If you're a non-resident owner of an unused property (one you don’t rent out), Spanish law treats the property as if it could generate rental income:

• Tax base: 2% of the cadastral value (reduced to 1.1% if recently revised).

• Tax rate: 19% for EU/EEA residents, 24% for others.

• Example: A €700,000 cadastral property taxed at 2% gives a base of €14,000; taxed at 19% = €2,660 annually, or €3,360 at 24%.

If you rent the property out, you instead pay tax on actual income (19% for EU/EEA residents, 24% otherwise), but then you can deduct expenses like maintenance, utilities, and mortgage interest.

Wealth Tax (Impuesto sobre el Patrimonio) & Solidarity Tax on Large Fortunes

This is where high-net-worth individuals need to pay attention.

Wealth Tax

• Applies if your net wealth exceeds €700,000, including an additional exemption of €300,000 for primary residences.

• Rates are progressive, from 0.2% to 3.5%, depending on the region and your net wealth.

Solidarity Tax on Large Fortunes

• Introduced nationally for wealth above €3 million, with rates from 1.7% to 3.5%.

• You offset any regional wealth tax paid against this tax to avoid double taxation.

Having a clear sense of your tax liabilities, especially if your Mallorca assets are €3 million or more, is critical to avoid surprises and structure your ownership tax-efficiently.

Selling a Property in Mallorca: What Taxes Apply

This is a crucial part of the guide, because high-net-worth individuals like you, the moment they buy they also think about exit strategy and resale implications.

When it comes time to sell your property in Mallorca, the tax obligations are just as important as when you bought it. Two key taxes will apply: Capital Gains Tax (CGT) and the Plusvalía Municipal, and both can significantly affect your net return.

Capital Gains Tax (CGT)

Capital Gains Tax (CGT) is charged on the profit you make from the sale. For residents in Spain, the tax is progressive, starting at 19% and increasing to as much as 27% for larger gains. Non-residents pay a flat rate: 19% if you are from the EU or EEA, and 24% if you are from outside.

To ensure compliance, the Spanish authorities automatically withhold 3% of the total sale price at the notary when a non-resident sells a property. This serves as an advance payment toward the final tax bill. If your liability is lower, you can reclaim the excess; if it is higher, you must settle the difference.

There are deductions that can reduce your liability. Purchase costs such as notary and legal fees, as well as the ITP or IVA paid at the time of acquisition, can be deducted. Renovations and extensions that were carried out legally, with permits, are also deductible.

Certain exemptions exist too: for example, if you are a Spanish resident over 65 and the home has been your primary residence for at least three years, you may not owe CGT at all.

Plusvalía Municipal (Impuesto sobre el Incremento del Valor de los Terrenos)

Alongside CGT, you will also encounter the Plusvalía Municipal, a local tax charged by the town hall on the increase in the value of the land itself during your ownership.

This is calculated using the cadastral land value and the number of years you have owned the property, up to a maximum of twenty years. Even if the market price of your property has not risen, Plusvalía may still be due.

However, following a reform of the law, sellers now have the right to challenge the tax if no real gain has been made.

For luxury properties, these taxes can easily run into the hundreds of thousands of euros. That is why advance planning is essential. By structuring ownership carefully, keeping records of all renovation costs, and timing your sale with a full understanding of the fiscal consequences, you can avoid unpleasant surprises and maximize your net proceeds.

Special Considerations for Non-Residents

Since many of our buyers client are international, usually it’s really important for them, and for you, to have a clear picture about how Spain treats non-resident owners.

If you are not a Spanish resident, your property ownership in Mallorca comes with a distinct set of tax obligations. These rules often surprise international buyers, especially those used to different systems at home, so it is important to understand them before you complete your purchase.

First, Spain applies a Non-Resident Income Tax even if you do not rent out your home. The government assumes that an unoccupied property could generate income, and therefore imputes a notional rental value.

This is calculated as a small percentage of the property’s cadastral value, and then taxed at 19% for EU and EEA residents, or 24% for those from outside Europe. If you do rent your property, you are instead taxed on the actual rental income, with the same rates applied. EU/EEA residents may deduct expenses such as maintenance, utilities, and mortgage interest, but non-EU owners cannot.

Double taxation is another key concern for international owners. Spain has agreements with many countries to prevent you from being taxed twice on the same income, but the specifics depend on your country of residence. This is why engaging a local tax advisor, familiar with both Spanish rules and international treaties, is essential.

For high-net-worth individuals, Spain’s Wealth Tax and the newer Solidarity Tax on Large Fortunes may also apply, depending on the value of your assets. Even if you hold property through a company, these structures do not automatically exempt you, and in some cases they may complicate rather than simplify your obligations. Careful structuring with professional advice is the only way to be sure you are compliant and optimized.

Finally, many non-EU buyers look to Spain’s Golden Visa program, which grants residency rights with a property investment of €500,000 or more (without a mortgage on that amount). For those pursuing this route, banks such as CaixaBank and Santander are experienced in structuring accounts and financing to meet visa requirements. Ownership through the Golden Visa pathway has its own nuances, and tax planning should be aligned with your residency and long-term goals.

Owning in Mallorca as a non-resident is entirely manageable, but only if you approach it with foresight. At Mallorca Select, we work exclusively with international buyers in the luxury segment, and we connect our clients with specialist tax advisors who ensure every aspect, from rental income to wealth tax, is handled correctly. This gives you the freedom to enjoy your property, confident that your fiscal responsibilities are under control.

Practical Examples: What Property Taxes Look Like in Reality

Understanding tax rules in the abstract is useful, but nothing brings clarity like seeing how they play out in practice. Here are two scenarios that illustrate the real costs of owning and selling property in Mallorca.

Case 1: Annual costs for a €5 million villa in Port d’Andratx

Imagine you have purchased a sea-view villa in Port d’Andratx for €5 million. The cadastral value of the property, which is usually lower than market value, is €1.5 million. On this basis, you will pay around €7,500 per year in IBI (local property tax, assuming a 0.5% rate). Add to that roughly €300 in annual waste collection fees.

As a non-resident EU buyer, you will also be liable for Non-Resident Income Tax. The government imputes 2% of the cadastral value as “theoretical income,” which in this case is €30,000. Taxed at 19%, this creates an additional annual liability of €5,700.

If your global wealth exceeds €3 million, the solidarity tax on large fortunes may also apply, in addition to wealth tax, depending on your structuring. For many high-value owners, this can mean tens of thousands of euros more each year, though exemptions and offsets exist. Altogether, owning such a property could mean recurring annual taxes of €15,000 to €25,000 or more, before utilities, maintenance, or staffing.

Case 2: Selling a €3 million villa after 10 years

Now imagine you sell a villa you purchased a decade ago for €2 million, at today’s value of €3 million. Your taxable gain is €1 million, though you may deduct costs such as notary fees, ITP paid at purchase, and any permitted renovation expenses.

As a non-resident EU seller, you will pay capital gains tax at 19%. On a €1 million gain, this amounts to €190,000. In addition, the notary will automatically withhold 3% of the sale price (€90,000) as an advance toward your tax bill. If your liability is lower, you may reclaim the difference.

You will also owe Plusvalía Municipal, the local land appreciation tax, based on the increase in the cadastral land value over your period of ownership. For a prime location over a decade, this can easily reach tens of thousands of euros, depending on municipal rates.

The net result is that while you may celebrate a €1 million profit, you will need to account for around €200,000–€250,000 in taxes before you see the proceeds in your account.

These examples show why understanding your fiscal obligations matters. With careful planning, keeping receipts, structuring ownership wisely, and consulting the right advisors, you can avoid surprises and optimize your outcome.

In Conclusion: How to Stay Compliant

Owning a property in Mallorca is a privilege, but it also means taking your fiscal responsibilities seriously. Spanish tax authorities are increasingly vigilant, especially with high-value transactions, and failing to comply can lead to penalties or interest charges that are entirely avoidable.

Organization

From the moment you purchase, keep careful records of every expense related to the property, not just maintenance, but also improvements, legal fees, and taxes paid. These documents may not feel important in the day-to-day, but when the time comes to calculate deductions for capital gains tax, they can save you a significant amount of money.

Deadlines

Most annual taxes, such as IBI or imputed non-resident income tax, have fixed payment windows. Missing them can trigger surcharges of 5% to 20%. Non-resident landlords must also declare rental income quarterly. Even small oversights add up quickly.

Professional Guidance

While it is possible to handle your tax obligations alone, the reality is that most international property owners choose to work with a gestor (a Spanish tax administrator) or a specialist property tax lawyer. These professionals ensure your declarations are filed correctly, advise you on available deductions, and represent you in front of the authorities if necessary. For wealthier clients, they can also advise on structuring assets to minimize exposure to wealth tax or the solidarity tax.

At Mallorca Select, we view this as part of the service. Beyond finding you the right property, we connect you with the island’s most reputable tax advisors — professionals we know personally, and who have guided our clients for years. This way, you can enjoy your property with peace of mind, knowing that your fiscal obligations are not just handled, but optimized.