Mallorca Insights

Real estate transfer tax in Mallorca - What to consider

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There is a lot to consider when buying real estate. In addition to the purchase contract, which requires good preparation, taxes are an important issue that is often underestimated by buyers. In addition to one-time payments, there are ongoing taxes that must be included in the calculation. The real estate transfer tax in Mallorca, also called "Impuesto sobre Transmisiones Patrimoniales" or ITP for short, is a one-time tax that is always incurred when real estate sales are not subject to VAT as in the purchase of a new property. What should you consider when buying a property in terms of land transfer tax and how much do the levies amount to? We have dealt with this in more detail in this article.

What is the ITP in Mallorca?

The purchase of a second-hand property is subject to the levy of the ITP in Mallorca, while for properties with first occupation the VAT is claimed. The Majorcan Real Estate Transfer Tax is set as a regional tax by the individual local authorities, can vary by autonomous region and can be both reduced and increased. In times of crisis, a reduction can help to promote the demolition of existing properties by trying to make the real estate market more attractive again. The ITP Mallorca is comparable to the German real estate transfer tax.

What do I have to pay attention to regarding the real estate transfer tax in Mallorca?

Anyone who has to pay the real estate transfer tax in Mallorca must fill out the appropriate form and make the payment on their own. Then, together with the receipt and the contract of sale, go to the tax office. The settlement must be made within 30 days from the date of the purchase contract. If you have decided to buy a property with us at Neptunus International Real Estate, we will take care of the bureaucratic necessities for you, so that you do not have to deal with any work and can fully enjoy your new home on the Mediterranean island.

How is calculated the real estate transfer tax in Mallorca 2020/2021?

The nationally applicable ITP is 7% on the stated sale price of a property, but each region has set different higher levies, varying between 8% and 11%. Real estate buyers must therefore be prepared for the following values for the real estate transfer tax in Mallorca 2020/2021, as soon as the purchase of a used property from a private person:

  • For a purchase amount of up to € 400,000 = 8%.
  • Between €400,000 and €600,000 = 9%.
  • From €600,000 to €1,000,000 = 10%.
  • From € 1,000,000 = 11 %

In addition, calculation examples:

You purchase a property for €400,000 with a tax burden of 8%. This means that the real estate transfer tax amounts to € 32,000. For a property with a purchase price of €700,000, you are subject to 10% and must expect to pay around €70,000.

With us you rely on a pre-calculation of all taxes, so that you know in advance how high the real estate transfer tax for your property in Mallorca will be and what other taxes you will have to pay. This way we avoid unpleasant surprises and you can calculate in the best possible way.

Tip from Neptunus International Real Estate for the "Impuesto sobre Transmisiones Patrimoniales".

You can pay the real estate transfer tax in Spain in installments spread over up to three years. However, this only applies if the property becomes a permanent residence and does not exceed 120 m2. It is important that the purchase price paid by you is listed in the purchase deed in the correct amount. We will be happy to advise you in detail on the ITP Mallorca, as well as on all other one-time and ongoing real estate costs that arise during the purchase. With us you are always well informed about everything.

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