A clear and elegant guide for discerning property buyers in Mallorca

Mallorca captivates instantly: sunlit terraces, timeless stone fincas, and a coastline that shifts tones throughout the day. Yet behind the beauty lies a practical side every buyer must understand: the taxes, fees, and ongoing expenses that shape the financial reality of owning property on the island. This guide serves as your essential roadmap, with a complete overview of one-time purchase costs, recurring ownership expenses, and long-term planning considerations. Think of it as preparing for a meaningful life decision, full of excitement but grounded in clarity. By the final section, you will not only understand the true cost of ownership, you will be able to plan, protect, and enjoy your Mallorca investment with confidence.

Executive Overview, Why Taxes Matter for Mallorca Owners

Buying property in Mallorca is a sensory experience; planning for its associated costs is a strategic necessity. Taxes and fees influence financing decisions, determine rental profitability, guide renovation budgets, and ultimately shape whether ownership feels effortless or unexpectedly burdensome.
Three key insights:
One-time purchase costs typically add 8 to 12 percent for resale properties, or 11 to 13 percent for new builds.
Annual ownership costs range from several thousand euros for modest homes, to tens of thousands for premium villas.
Long-term planning, including ownership structure and detailed record-keeping, protects your investment and reduces exposure to risk.
This guide breaks down each element clearly, helping your Mallorca property journey begin smoothly and stay financially secure.

One-Time Purchase Costs, What You Actually Pay at Closing

Signing the purchase contract represents both an emotional milestone and a financial pivot. Understanding these costs ensures transparency and eliminates surprises.

Transfer Tax (ITP) for Resale Properties

A regional tax applied to second-hand homes. Estimated brackets for the Balearic Islands in 2025:

• 8 percent for properties up to €400,000
• 9 percent for €400,001 to €600,000
• 10 percent above €600,001

In the luxury bracket, ITP becomes a predictable part of overall costs. Limited discounts may apply for specific profiles such as large families or first-time buyers.

VAT (IVA) and Stamp Duty (AJD) for New Builds

• VAT (IVA): 10 percent on new residential properties
• Stamp Duty (AJD): approx. 1.2 percent

Although new builds come with higher taxes, they also include developer warranties that reduce future repair risks.

Notary, Land Registry and Administrative Fees

• Notary: €600 to €2,000 depending on complexity
• Land Registry: €400 to €1,500
• Administrative municipal charges: minor but obligatory

Legal Fees, Agent Commissions and Valuation Costs

• Lawyer: 0.7 to 1.5 percent of purchase price

• Estate agent commission: usually paid by the seller in Mallorca, but confirm in writing

• Valuation and bank fees: valuations from €250; bank arrangement fees up to 1 percent

Practical Examples

Example A, €1,000,000 resale villa

• ITP: €80,000 to €100,000
• Notary + registrations: approx. €3,000
• Lawyer (1 percent): €10,000
• Mortgage and valuation: approx. €5,000
  Total: €98,000 to €118,000 (approx. 9.8 to 11.8 percent)

Example B, €1,000,000 new build

• VAT: €100,000
• AJD: approx. €12,000
• Notary + registry: approx. €3,500
• Legal fees: €10,000
  Total: €125,500 (approx. 12.6 percent)

Action Step: Budget 10 to 12 percent on top of the purchase price for closing costs.

Annual Ownership Costs, The Recurring Bills that Shape Cash Flow

Once you own the property, annual cost planning becomes essential. These expenses vary by location, property type and lifestyle.

Property Tax (IBI)

Municipal tax based on cadastral value.
Rates: 0.4 to 1.1 percent; most Mallorca properties fall between 0.4 and 0.8 percent.

Community Fees

• Modest residential blocks: €600 to €3,000 per year

• Luxury estates: €6,000 to €30,000+ per year
  Special assessments may apply for major works

Insurance, Waste Tax and Utilities

• Insurance: €500 to €2,500+, depending on value

• Waste tax: €100 to €600 per year

• Utilities: €4,000 to €15,000 annually for family villas

Non-Resident Imputed Income Tax (IRNR) and Rental Tax

If the property is not rented, a notional rental income is calculated.

• 1.1 percent or 2 percent of cadastral value
• 19 percent tax for EU residents; 24 percent for non-EU

Wealth Tax, Solidarity Levy and Inheritance Considerations

High-net-worth owners should forecast wealth tax and plan succession. Spanish wills are strongly recommended.

Operating Budgets, Maintenance, Staffing and Unexpected Items

Annual upkeep is often underestimated. Planning ensures long-term enjoyment.

Typical budget items:

• General maintenance: 1 to 2 percent of property value
• Pool and garden care: €6,000 to €25,000 annually
• Staff: €40,000 to €120,000 annually for full-time management
• Renovation reserve: 5 to 10 percent over five years

Example Annual Budget, Family Villa: approx. €29,600

Long-Term Financial Planning, Strategy, Structure and Exit

Ownership Structures

Individuals benefit from simplicity, while companies offer planning opportunities but require specialist guidance.

Financing, FX Risk and Mortgage Planning

Non-residents typically access 60 to 70 percent LTV mortgages. Currency risk should be actively managed.

Capital Gains, Selling Costs and Timing

Non-residents pay a flat CGT of 19 percent (EU) or 24 percent (non-EU).

Succession and Wills

A Spanish will simplifies probate and inheritance.

Note: All figures are aligned with 2025 Mallorca regulations.

Common Pitfalls and How to Avoid Them

• Underestimating closing costs
• Ignoring the cadastral value
• Overestimating summer rental income
• Failing to check community minutes
• Buying without verifying permits
• Using complex structures without advice
• Neglecting FX risk

Avoidance strategy: Build a trusted circle of professionals.

Practical Checklist, Day One to Year Five

Immediate Steps: NIE, bank account, lawyer, valuation, reserve 10 to 12 percent for costs
Closing to Year One: ITP or VAT + AJD, notary fees, insurance and utilities
Annual: IBI, community fees, maintenance, utilities
Five Years: Renovation planning, ownership review, succession and long-term tax planning

CTAs and Next Steps

• Request a personalised Mallorca tax briefing
• Book a legal and tax consultation
• Download our ownership budget template and annual tax checklist
• Request a rental income and ROI analysis

Each step connects you with trusted local experts through Homerun Brokers.

Final Note, Ownership with Eyes Wide Open

Owning property in Mallorca is more than acquiring a home. It is creating a lifestyle. Planning for taxes and costs is not an obstacle; it is the structure that keeps your dream property steady.

If you want a precise ownership forecast, including a tailored five-year cash flow model and tax breakdown, request your personalised Mallorca Property Taxes Pack.

FAQs, Ten Quick Answers

Q1: How much should I budget for one-time costs?
A: 8 to 12 percent for resale; 11 to 13 percent for new builds.

Q2: Will I pay tax if I do not live in the property?
A: Yes, non-resident imputed income tax applies.

Q3: Can I deduct renovation costs when selling?
A: Yes, if documented and permitted.

Q4: Should I buy through a company?
A: Only after specialist advice, as it can complicate taxes and financing.

Q5: Are short-term rentals regulated?
A: Yes, licences are required.

Q6: What are typical yearly costs?
A: IBI, community fees, utilities, insurance and maintenance.

Q7: How is IBI calculated?
A: Based on cadastral value, not market value.

Q8: Do I need a Spanish will?
A: Yes, for smooth succession.

Q9: How does CGT work?
A: EU non-residents pay 19 percent; others 24 percent.

Q10: Are there surprise costs?
A: Pool and garden care, special assessments and maintenance projects.