This article is to offer some guidance on the costs you should consider when buying a property in Mallorca. Please note these are for guidance only. Your personal tax situation will depend on your status and you should always seek the advice of a professional in matters that are of financial importance to you.
Purchase taxes and other one off purchase costs
As a guide you should allow 10% of the final purchase price to cover purchase taxes, legal and other associated costs. Most of this (7%) is property transfer tax. For more detail on these costs please see our main website feature on buying a property in Mallorca.
It is worth noting that much of these purchase costs can be off-set against any future capital gains tax when you come to sell the property. This is also noted in more detail on the same page on our main website.
Ongoing costs
There are basically four areas of cost to consider:
1) “Property Income Tax”.
This is a tax for non-residents and is based on “assumed income”. The tax is calculated at a rate of 25% of the assumed income which is obtained by multiplying the cadastral (land registry) value of the property by approximately 1.2%.
By way of example, a property with a registered value of Euro 400.000 would give rise to a tax liability as follows:
Taxable base (assumed income) : 400.000 x 1.1% = €4,400
Tax on that income at 25%: €4.400 x 25% = €1.100
2) I.B.I . (Impuesto Bienes Inmuebles)
This is a real estate tax levied by the local town hall to cover services to the municipality. It is much like the UK Council Tax. The amount varies by area but is usually less than the council tax would be for an equivalent property in the UK.
There used also to be a wealth tax but this has been abolished – see : abolition of wealth tax in Mallorca.
3) Utilities. Gas, water, electricity and phone services will obviously vary according to usage. The cost “per unit” is generally marginally higher than in the UK and, whilst heating costs might be lower, air-conditioning and pools can consume more electricity than you are used to.
To be on the safe side estimate overall costs to be a bit higher than you would estimate for a similar property with similar usage in the UK. It should also be possible to get copies of previous bills for a property you are buying in order to plan budgets more accurately.
4) Maintenance. It is best to set this around the same level overall as you would expect in a similar property in the UK.
If your property is in a community development with communal facilities such as a pool maintenance will be covered within a monthly community charge. These vary according to the facilities provided and the standard of upkeep. Generally they are Euro 100 to Euro 350 per month.
When you are considering buying a property in a community you should be able to get an exact figure in advance.
Further useful information:
≈ Tax and finance advisers in Mallorca
≈ Lawyers in Mallorca
