Mallorca Property Taxes Explained: ITP, VAT & Plusvalía
- coastprojectsmallo
- Sep 29, 2025
- 3 min read
Updated: Sep 30, 2025
Buying property in Mallorca is an exciting step, but many foreign buyers overlook one crucial aspect: property taxes. Understanding how taxes like ITP, VAT, and Plusvalía work can save you from unexpected costs and help you plan your investment wisely.
In this guide, we’ll explain every tax you need to consider when purchasing a property in Mallorca, with clear examples and updated information for 2025.
What Are the Main Property Taxes in Mallorca?
When buying a home in Mallorca, you will typically encounter three main taxes:
ITP (Impuesto de Transmisiones Patrimoniales): property transfer tax on resale homes.
VAT (IVA) + AJD (Stamp Duty): applied to new builds or properties purchased directly from a developer.
Plusvalía Municipal: a local capital gains tax paid to the town hall when selling.
ITP – Property Transfer Tax in Mallorca
Applies to: Second-hand (resale) properties.
Rate: Progressive scale between 8% and 15%, depending on the purchase price.
Example:
Property price: €500,000
First €400,000 → 8% = €32,000
Next €100,000 (from €400,000 to €500,000) → 9% = €9,000
Total ITP to pay: €41,000
VAT (IVA) and Stamp Duty (AJD) – For New Properties
Applies to: New build homes bought directly from a developer or a bank.
VAT rate: 10% (residential property).
AJD (Stamp Duty): 1.5% of the purchase price (Balearic Islands).
Example:
Property price: €400,000
VAT (10%): €40,000
AJD (1.5%): €6,000
Total tax: €46,000
Plusvalía Municipal in Mallorca
Applies to: The seller (not the buyer).
What it is: A municipal tax based on the increase in the value of the land since the last transfer.
How it’s calculated: Depends on:
Number of years the property was owned.
The cadastral value of the land.
Coefficients set by the local town hall.
Note: After recent reforms, sellers can choose between the real gain method or the cadastral method, whichever is more favorable.
Ongoing Property Taxes in Mallorca
Apart from purchase taxes, buyers should also budget for yearly property expenses:
IBI (Impuesto sobre Bienes Inmuebles): Annual property tax (0.4%–1.1% of cadastral value).
Basura (Waste collection tax): Annual municipal fee.
Non-Resident Income Tax (if applicable): Applies if you don’t rent the property but are a non-resident in Spain.
Practical Example – Buying a €600,000 Property in Mallorca
If it’s a resale property:
First €400,000 → 8% = €32,000
Next €200,000 (from €400,000 to €600,000) → 9% = €18,000
Total ITP = €50,000
Notary & registry fees: ~€3,000
👉 Total additional costs: ~€53,000
If it’s a new build:
VAT (10%): €60,000
AJD (1.5%): €9,000
Notary & registry fees: ~€3,000
Total additional costs: ~€72,000
FAQs About Mallorca Property Taxes
Do foreigners pay higher property taxes in Mallorca?
No. The tax rates are the same for residents and non-residents.
Can I deduct VAT if I buy through a company?
Yes, under certain circumstances (for professional activity or property development). Always seek legal advice before structuring your purchase.
Who pays Plusvalía in Mallorca?
By law, the seller pays Plusvalía, unless otherwise negotiated in the contract.
Conclusion
Understanding Mallorca property taxes is essential before buying your dream home. From ITP and VAT to Plusvalía and annual costs, knowing what to expect will help you avoid surprises and plan your budget accurately.
At Coast Projects, we specialize in helping foreign buyers navigate the entire property purchase process in Mallorca — from legal checks and contracts to tax advice and transaction management.
Contact our real estate lawyers today for personalized advice and make sure your purchase in Mallorca is safe, smooth, and tax-efficient.
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