There’s a figure that surprises almost every first-time buyer in Mallorca: the total costs of purchasing a property are typically 10–13% on top of the price you agreed to pay. On a €1 million villa, that’s an additional €100,000–130,000 before you’ve bought a single piece of furniture.
None of this is hidden or unfair — it’s simply how property transactions work in Spain, and once you understand the structure, you can plan with confidence. This guide breaks down exactly where that money goes, both at the point of purchase and in the years that follow.
The Big One: Purchase Taxes
The largest upfront cost isn’t legal fees or the notary — it’s tax. And which tax you pay depends on what kind of property you’re buying.
Resale Properties: Transfer Tax (ITP)
When buying a second-hand property from a private seller, you pay Impuesto sobre Transmisiones Patrimoniales (ITP). The Balearic Islands apply a progressive rate structure based on the purchase price:
It’s important to understand this is a tiered system — you don’t pay the higher rate on the entire purchase price, only on the portion that falls within each band.
A worked example: Say you’re buying a resale villa for €850,000.
- First €400,000 × 8% = €32,000
- Next €200,000 × 9% = €18,000
- Final €250,000 × 10% = €25,000
- Total ITP: €75,000 (an effective rate of about 8.8%)
ITP must be paid within 30 days of signing the deed at the notary, using Form 600 submitted to the Balearic Tax Agency (ATIB).
New Build Properties: VAT (IVA) + Stamp Duty (AJD)
When buying a brand-new property directly from a developer, you pay VAT instead of ITP, plus a stamp duty:
- IVA (VAT): 10% of the purchase price for residential properties
- AJD (Stamp Duty): 1.5% of the purchase price (rising to 2% for properties over €1 million)
A worked example: New build villa at €1.2 million.
- IVA: €1,200,000 × 10% = €120,000
- AJD: €1,200,000 × 2% = €24,000
- Total tax: €144,000
The IVA is paid directly to the developer as part of the transaction, while the AJD is filed separately.
Notary Fees
The notario — a state-appointed official who authenticates the sale deed — must be involved in every property transaction in Spain. Their fees are regulated by the government and based on the complexity and value of the transaction, but as a general rule, expect to pay between €600 and €2,000 for a standard residential purchase. For a property in the €500,000–€1 million range, a figure around €1,000–1,500 is typical.
Land Registry Fees
Once the sale is complete and taxes are paid, the deed goes to the Registro de la Propiedad to be registered in your name. Registration fees are modest — typically €300–€1,200 depending on the property value — but they’re a necessary step in establishing your legal ownership.
Legal Fees
An independent property lawyer is not legally required in Spain, but not having one is a false economy that experienced buyers never repeat. Legal fees in Mallorca typically run to 1–1.2% of the purchase price, plus VAT.
At €800,000, that’s around €8,000–9,600 plus the 21% VAT on professional services — so budget approximately €9,700–11,600 all in. Some lawyers charge a fixed fee for lower-value properties; it’s worth discussing the structure upfront.
Your lawyer will conduct title searches, review contracts, handle tax filings, and ensure the property is cleanly registered in your name. They’re your most important professional throughout the process.
Mortgage Costs (If Applicable)
If you’re financing part of the purchase, additional costs apply:
- Mortgage valuation fee: Typically €500–1,500, depending on the property value and which bank conducts the appraisal.
- Mortgage deed: If you’re taking a Spanish mortgage, the deed itself must be notarised. Since 2019, Spanish law requires lenders to cover the AJD on mortgage deeds, but ancillary costs remain.
- Arrangement fees: Some lenders charge an opening commission of 0.5–1% of the mortgage amount.
- Broker fees: If you use a mortgage broker (often worthwhile for navigating the Spanish system as a non-resident), expect to pay 0.5–1% of the loan amount.
As a non-resident, Spanish banks will typically finance 60–70% of the purchase price, so your cash requirement is higher than it might be in your home country.
Putting It All Together: A Budget Example
Let’s take a resale property at €900,000:
Add roughly €15,000 on top if financing with a Spanish mortgage. Total: just under €1.01 million for a €900,000 property.
Ongoing Annual Costs
The purchase is just the beginning. Once you own a property in Mallorca, there are annual costs to factor into your budget.
IBI — Annual Property Tax
The Impuesto sobre Bienes Inmuebles (IBI) is Spain’s equivalent of council tax — an annual levy paid to your local town hall based on the property’s cadastral value (an administrative figure set by the authorities, typically below market value). IBI rates across the Balearic Islands generally run between 0.4% and 1.1% of the cadastral value.
For many properties in Mallorca, the actual bill is very manageable — for a villa with a cadastral value of €200,000, the IBI would be between €800–2,200 per year depending on your municipality. Alaró, Santa Maria del Camí, and other inland villages tend to have modest rates.
Community Fees (*Gastos de Comunidad*)
If your property is within a development or urbanisation with shared facilities — gardens, pool, security — you’ll pay monthly or annual community fees. These vary enormously: a simple development might charge €50–150 a month, while a gated resort with extensive facilities could run to €500 or more. For a standalone country house, there are no community fees at all.
Rubbish Collection
A small annual charge levied by the town hall — typically €150–200 per year.
Home Insurance
Buildings insurance is not legally required for property owners in Spain (unlike for mortgage holders, where the bank requires it), but it’s obviously sensible. A good policy for a villa in Mallorca typically runs to €800–2,500 per year depending on the value and specification of the property.
Non-Resident Income Tax
If you own property in Mallorca but are not a Spanish tax resident, you are liable for an annual Impuesto sobre la Renta de No Residentes (IRNR) even if the property is empty. For EU and EEA nationals, the rate is 19%; for non-EU nationals, it’s 24%. The taxable “income” is calculated as 1.1% of the cadastral value. It’s a modest obligation, but one that catches non-residents by surprise if they don’t know about it.
If you rent the property out, income from rentals is taxable in Spain and must be declared.
Utilities
Ongoing electricity, water, and potentially gas or oil costs will vary with usage, of course. Energy-efficient new builds — with solar panels, heat pumps, and good insulation — can dramatically reduce utility costs compared with older properties.
The Honest Summary
The true cost of buying a home in Mallorca is the purchase price plus roughly 10–13% at the point of purchase, and then a set of annual costs that, for most properties, are modest compared to equivalent costs in the UK, Germany, or Scandinavia.
The key is to go in with eyes open, budget properly, and work with professionals who give you clear numbers upfront. No nasty surprises, no hidden extras — just honest planning.
If you’d like to understand what a bespoke new build in the Tramuntana foothills might cost, or simply want to talk through the process with someone who’s done it many times, do browse our current projects. We’re always happy to have an honest conversation.
See our current projects → Explore Coertze & Clacher developments in Mallorca