In theory, the answer is simple. Every property elicits different taxes. In order to calculate these taxes, you must first understand the details of the property.
The direct taxes that you pay when purchasing a property are on a sliding scale. Whereas, the indirect taxes that are paid annually on a Mallorcan property, depend greatly on location and size of the property. Additionally, a wealth tax is tacked on if assets exceed 700,000 euros.
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This calculation includes:
The various taxes related to property transfers in Mallorca
Below is the tax breakdown for NEWLY BUILT properties subject to VAT (IVA) taxes:
- 4% VAT Rate: Properties built with government subsidies
- 10% VAT Rate: Properties built by a property developer and set to be put on the market
- 21% VAT Rate: Commercially-zoned property that includes an adjoined residential unit
Each VAT tax bracket is also subject to a 1.5% Stamp Duty Tax.
Buying an existing property
When buying an existing property, a Transfer Tax (Impuesto de Transmisiones Patrimoniales or ITP) is issued. This tax must be paid within 30 days of the initial purchase. This tax, like the VAT, is also on a sliding scale as follows:
- A property valued at 1 to 400,000 euros will include an 8% tax rate
- A property valued at 400,001 to 600,000 euros will include a 9% tax rate
- A property valued at 600,001 to 1,000,000 euros will include a 10% tax rate
- A property exceeding 1,000,000 euros will include an 11’5% tax rate
- A property exceeding 1,000,000 to 2.000.000 euros will include an 12% tax rate
- For the tranche above 2.000.0001 euros, 13% of the value is paid.
Yearly taxes for property ownership in Mallorca
Beyond the VAT and Transfer Tax, there are also yearly taxes for property ownership in Mallorca. Some of these taxes may be included:
- Garbage Tax
- Wealth Tax. The wealth tax, much like the VAT and Transfer tax, is dependent on the level of wealth. If you’re a non-resident, the percentage depends on all your assets in Spain. If you become a tax resident in Spain then the wealth tax applies to all your assets in total, not only limited to Spain.
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Enter the sales price and any additional information you find valuable of your planned future purchase and I’ll provide a breakdown of all taxes and expenses on the aforementioned property.
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