Property Taxes in Spain for Foreigners: The Complete Buyer's Guide

Transfer Tax (ITP) — Your Biggest One-Off Cost

The Impuesto sobre Transmisiones Patrimoniales (ITP) is the largest tax you'll pay when buying a resale property in Spain. It's charged as a percentage of the purchase price and varies by region.

In the Balearic Islands (which includes Mallorca), ITP is progressive:

Up to €400,000: 8%

€400,001–€600,000: 9%

€600,001–€1,000,000: 10%

Over €1,000,000: 11%–13%

So on a €600,000 resale property in Mallorca, you'd pay approximately €50,000 in ITP alone. Budget carefully — this is non-negotiable and must be paid within 30 days of completion.

ITP only applies to resale properties. If you're buying a new-build directly from a developer, you pay VAT (IVA) at 10% instead of ITP.

Stamp Duty (AJD) — New Builds and Mortgages

Actos Jurídicos Documentados (AJD), or stamp duty, applies to notarised documents. For new-build purchases, AJD in the Balearics is 1.2% of the purchase price (in addition to IVA at 10%).

If you take out a mortgage, the lender now pays AJD on the mortgage deed (this changed in 2018 under Spanish law). So as a buyer with a mortgage, you no longer need to budget for AJD on the loan itself.

VAT (IVA) on New Builds

As mentioned, new residential properties are subject to IVA at 10% (reduced rate for housing). Commercial properties or parking spaces sold separately are charged at 21%.

You'll also pay AJD at 1.2% on the purchase deed. So for a €500,000 new-build apartment in Mallorca, expect: €50,000 (IVA 10%) + €6,000 (AJD 1.2%) = €56,000 in taxes.

Annual Property Tax (IBI)

Impuesto sobre Bienes Inmuebles (IBI) is Spain's equivalent of council tax — an annual tax paid by all property owners, Spanish or foreign. The amount is calculated as a percentage of the property's cadastral value (valor catastral), which is typically much lower than market value.

IBI rates vary by municipality. In Mallorca, rates typically range from 0.4% to 1.1% of the cadastral value. For a property with a cadastral value of €150,000, you might pay between €600 and €1,650 per year. IBI is paid once a year, usually in autumn.

Non-Resident Income Tax (IRNR)

If you own a property in Spain but are not a Spanish tax resident, you must file an annual non-resident income tax return (Impuesto sobre la Renta de No Residentes — IRNR), even if you don't rent the property out.

For an owner-occupied or unrented property, Spain imputes a notional rental income — typically 1.1%–2% of the cadastral value — and taxes it at:

19% for EU/EEA residents

24% for non-EU residents

If you do rent your property, you pay IRNR on the actual rental income. EU residents can deduct allowable expenses; non-EU residents currently cannot.

Capital Gains Tax (CGT) When You Sell

When you sell your Spanish property, any profit (capital gain) is subject to tax. The rate depends on whether you are a Spanish resident or non-resident.

For non-residents, the flat CGT rate is 19% (EU/EEA citizens) or 24% (non-EU citizens) on the gain.

For Spanish tax residents, capital gains are taxed progressively:

Up to €6,000: 19%

€6,000–€50,000: 21%

€50,000–€200,000: 23%

Over €200,000: 26%

A key point for non-residents: when you sell, the buyer is legally required to retain 3% of the purchase price and pay it directly to the Spanish Tax Agency (Agencia Tributaria) as a withholding against your CGT liability. You then file a return to claim any refund or pay any balance due within 4 months.

Plusvalía — Municipal Land Value Tax

La Plusvalía (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana) is a municipal tax charged on the theoretical increase in the value of urban land from when you acquired the property to when you sell it.

The seller normally pays Plusvalía — though in practice it's often negotiated. After a 2021 Supreme Court ruling, the tax is now calculated on actual gain, so you won't pay it if you sell at a loss.

Wealth Tax (IP) — High-Value Property Owners

Non-residents who own property in Spain worth more than €700,000 may be liable for Wealth Tax (Impuesto sobre el Patrimonio). In the Balearic Islands, this threshold applies per person, and the rates range from 0.28% to 3.45% of net assets above the threshold.

Note: Spain's solidarity tax on large fortunes (above €3M) was introduced in 2023, so high-net-worth buyers should take specialist tax advice.

How to Pay Your Spanish Property Taxes

All Spanish property taxes are handled through the Spanish Tax Agency (Agencia Tributaria). As a non-resident, you are legally required to appoint a Spanish fiscal representative to manage your IRNR filings. Your property lawyer can usually act in this capacity or recommend a specialist.

Key deadlines to be aware of:

ITP: 30 days from completion

IRNR (no rental): annual return, filed by 31 December

IRNR (rental income): quarterly returns

IBI: set by your municipality, usually autumn

Working with a Property Lawyer in Mallorca

Navigating Spanish property taxes is complex, especially as a non-resident. At Coast Projects Mallorca, our legal team handles all tax obligations on your behalf — from calculating ITP at purchase to filing your annual non-resident tax return.

Contact us today to get a complete cost breakdown before you commit to buying.

Ready to Start Your Property Search in Mallorca?

Understanding your tax obligations is just one piece of the puzzle. Explore our Mallorca property buying guide and NIE number guide for everything you need to know before you buy.