When buying a property in Mallorca, different guidelines apply than in Germany or England - among other things in terms of taxes. In the following, we at REAL ESTATE YESWECAN BALEARES give you an overview of the onetime (purchase) and annual taxes that apply to you as a buyer, and also provide you with useful information on the subject of tax numbers (NIE) and residencia.
When you buy a property on Mallorca, you have to pay taxes to the Spanish state. One of the one-off taxes is the property transfer tax, which is only due for used properties and ranges from eight percent (purchase price under 400,000 euros) to eleven point five percent (purchase price over 1 million).
If you buy a new build property on Mallorca, you do not have to pay land transfer tax and instead you have to pay VAT - ten percent of the purchase price for residential property and 21 percent for a plot of land if it is owned by a company.
In addition to the property transfer tax or VAT, there is also the notarisation tax, also known as stamp duty. If you are buying a residential property for the first time and its value does not exceed 200,000 euros, the tax rate is 1.2 percent of the purchase price; in all other cases it is 1.5 percent.
As the owner of a property in Spain, you must pay an annual property tax of 0.3 to 1.1 per cent of the value of the property. Income tax is also due, the amount of which depends on whether you rent out the property or live in it yourself. In addition, the Spanish state levies a property tax of 0.2 to 3.5 per cent.
When buying a property in Mallorca, you should also include the purchase costs in your calculations. The transaction costs include the costs for the notary and for the entry in the land register as well as the fees for the Gestoria, which handles the correspondence with the land registry and the banks.
The NIE (Número de Identificación de Extranjeros) is a tax number that is mandatory if you are a foreigner buying a property on Mallorca. It is advisable to apply for it at a Spanish consulate, but it is also possible to apply directly at the immigration office in Palma. If you would like to move your centre of life to Mallorca, you also need a Residencia, which you can request at the same time as the NIE.
Spanish tax law is confusing and has many traps in store for you. It is therefore all the more important to consult a professional when buying a property on Mallorca. It is best to seek comprehensive advice from REAL ESTATE YESWECAN BALEARES to ensure that your property purchase runs smoothly and is legally secure.