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Property Taxes in Mallorca

Discover the Mallorca property taxes & duties

Property Taxes in Mallorca

Many people can think that buying a house in a foreign destination will be much cheaper than buying a property in the UK. Whilst this may be true, it is advisable to take some time investigating and understanding your tax and legal position before you make concrete decisions about your dream property as they can add significant amounts to your purchase price and annual maintenance charges.

Foreign property taxes & legalities

Don't rely on your estate agent or seller to furnish you with all the facts, they are afterall after the sale and won't want you to be delaying that process completing.

When buying in a foreign country, you should always consider the tax implications of buying, selling and possibly renting out your property. Taxes rules and rates can vary immensely from location to location so make sure you have done your homework as unexpected taxes could be crippling for you further down the line. Your tax situation may well be affected as a result of your foreign property purchase so advice should be sought from a professional who can offer specific guidance on issues such as:

  • taxation in the UK
  • capital gains tax
  • succession laws and inheritance tax
  • foreign taxation
  • and
  • double taxation implications

For example, did you know that if you decide to rent out your property abroad you will need to declare this income to the taxman in the UK and potentially the country where you have bought the property, no matter how small the sums involved? And, did you know that most countries will apply some form of 'gain taxation' against the sale of a second home? You may therefore wish to set this off against the profit you make on your purchase when selling it at a later date. You should also be aware that some countries have different succession and inheritance taxes and laws that are very different to that in the UK which can lead to expensive traps for the uneducated.

These are just a few areas within the complex subject of property taxes which may, or may not be applicable to you when purchasing your property abroad. It's therefore vital that you seek solid tax and legal advice before taking the plunge on any type of foreign property.

Please note that foreign property taxation and legal issues are complex and difficult subjects with which you should seek independent advice individual to your requirements. Taxes and legal issues outlined here are merely general in nature and therefore no liability is accepted in connection with the information provided.

General taxes

As an owner of a property in Spain, you will become responsible for the associated property taxes.  

There is Patrimonial Tax (newly re-introduced wealth tax) which is based on the rateable value of your property, and this is paid annually in December.

Spanish Succession Laws (Inheritance) - it is essential that you draw up a Spanish will to cover any property and assets in Spain. This is especially important if there are children or step children involved. A notary will be able to legalise the documentation.

Local property taxes

The two local Mallorca taxes are the Taxes IBI (local tax) and the Basura, which pays for rubbish collection. Both of these taxes are decided and collected by the local town hall and will vary from region to region. The agent should be able to advise on the amount payable for your property before you buy.

Both of these are paid to an agency called SUMA, a part of local government. Most towns should have their own SUMA office.

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