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One of the first questions foreign buyers ask is how much they need on top of the price. Property purchase taxes in the Balearic Islands depend mainly on whether the home is new or resale and on its value. As a rule of thumb, total buying costs usually range between 10% and 15% of the purchase price. Here is how that figure is made up.
Resale property: transfer tax (ITP)
When you buy a property from a private seller, you pay transfer tax (*Impuesto sobre Transmisiones Patrimoniales*, ITP). In the Balearic Islands it follows a progressive scale by value brackets, starting at 8% for the first bracket and increasing for higher-value properties, with the top rates applying to properties worth several million euros. Reduced rates exist in specific cases, such as some first homes for young buyers or residents, subject to conditions.
Because the scale is progressive, the effective rate on a €1.5 million villa is higher than on a €350,000 apartment. Your lawyer will calculate the exact figure before you sign the contract.
ITP must be paid within one month of signing the deed.
New property: VAT and stamp duty
When you buy a new home directly from a developer:
- VAT (IVA): 10% for dwellings (garages and storage rooms sold with the home follow the same rate; commercial premises and plots are taxed at 21%).
- Stamp duty (AJD): a percentage of the price payable on the public deed, set by the Balearic Government.
Other purchase costs
Notary
Notary fees are regulated and depend on the price and the length of the deed. They are usually a modest amount compared with the taxes.
Land Registry
Registration fees are also regulated by scale and are generally lower than notary fees.
Legal fees
An independent lawyer usually charges around 1% of the price or a fixed fee, plus VAT. This covers due diligence, contracts, completion and registration.
Mortgage costs
If you finance the purchase, add the valuation, the bank’s fees and possible insurance. Since 2019 most mortgage formalisation costs are paid by the bank.
Other
Sworn translations, NIE, technical survey and currency exchange costs where applicable.
Annual taxes after buying
Owning a property brings recurring taxes:
- IBI: the municipal property tax, based on the cadastral value.
- Rubbish collection tax.
- Non-resident income tax: non-residents file an annual return even if the property is not rented, based on a percentage of the cadastral value. Rental income is taxed separately.
- Wealth tax: may apply to high-value assets, with thresholds and rules that should be reviewed individually.
Our tax lawyers prepare these calculations and filings for international owners.
Selling later
When you sell, you will face capital gains tax and the municipal *plusvalía*. If you are non-resident, the buyer withholds 3% of the price. Planning your purchase structure with the future sale in mind can save tax. Read more about Spanish non-resident taxes.
Frequently asked questions
Can I include taxes in my mortgage?
Spanish banks usually finance a percentage of the price or valuation, not taxes. Plan to pay costs from your own funds.
Who pays the plusvalía when buying?
Legally the seller pays it in a sale, although it can sometimes be negotiated. Your lawyer should confirm it is covered.
Is the price declared at the notary important?
Yes. Declaring a lower price than the real one is illegal and creates tax problems later, especially on resale.
Conclusion
Knowing the full cost before you commit avoids stress at completion. A lawyer who calculates taxes precisely, including the progressive Balearic scale, gives you a realistic budget from the start. Castell.law provides a detailed cost estimate to every buyer before the deposit is paid.
