Tax on property transfers/property transfer tax and documented legal acts
The Tax on Property Transfers/Real Estate Transfer Tax and Documented Legal Acts (ITP and AJD) is a tax transferred by the State to the Autonomous Community when buying a property in Mallorca. It relates to transfers for consideration “inter vivos” and similar transactions, the establishment of rights in rem, loans, guarantees, rental agreements, annuities and administrative concessions that take place outside of business or professional activities. Exceptions are certain real estate transactions that are exempt from VAT (IVA), as well as incorporation, capital increases and other corporate transactions. Finally, it includes the notarization of facts, actions or legal transactions in notarial, commercial or administrative documents that meet the legal requirements.
Especially when buying real estate in Mallorca, the ITP property transfer tax is the largest part of the “ancillary purchase costs”.
Tax categories
The tax comprises the following categories or types of tax:
A. Transfer of assets for consideration
B. Corporate transactions
C. Documented legal acts
A. Transfer of assets for consideration
Taxable event
- Paid transfers of assets and rights through “inter vivos” transactions involving the assets of natural or legal persons.
- The establishment of rights in rem, loans, guarantees, rental agreements, annuities and management concessions and their subsequent extension.
- Business-related real estate transactions that are subject to or exempt from VAT.
Assessment basis
The assessment basis is the actual value of the transferred assets or the established or transferred right. The valuation programs provided on this portal can be used to calculate the value of real estate, berths, vehicles and nautical goods.
Tax debtor
- For transfers of assets and rights: the acquirer.
- When establishing rights in rem: the beneficiary of the act.
- When establishing guarantees: the secured creditor.
- When establishing rental agreements: the tenant.
- For management concessions: the concessionaire.
Tax rates
A distinction is made between general and reduced or special tax rates.
General tax rates
a) The average tax rate resulting from the application of the following scale depending on the actual or declared value (if higher) of the transferred or furnished real estate property:
| Value from (Euro) | Integral rate (Euro) | Further value up to (Euro) | Applicable rate (%) |
|---|---|---|---|
| 0 | 0 | 400.000 | 8 |
| 400.000,01 | 32.000 | 200.000 | 9 |
| 600.000,01 | 50.000 | 400.000 | 10 |
| 1.000.000,01 | 90.000 | 2.000.000 | 12 |
| 2.000.000,01 | 210.000 | Further value | 13 |
b) If the transferred real estate property is classified as a parking lot, except in the case of garages attached to apartments up to a maximum of two, where the general rule applies, the average applicable rate is calculated according to the following tariff scale depending on the actual or declared value (if this is higher) of the transferred parking garage or the established or transferred right:
| Value from (Euro) | Integral rate (Euro) | Further value up to (Euro) | Applicable rate (%) |
|---|---|---|---|
| 0 | 0 | 30.000 | 8 |
| 30.000,01 | 2.400 | Further value | 9 |
Reduced or special tax rates
- Reduced tax rate of 4%: If the actual or declared value (if higher) of the real estate property acquired is equal to or less than EUR 270,151.20 and the property represents the purchaser’s main residence at the time of acquisition. The purchaser must acquire at least 50% of the full ownership or the right to use or enjoy the apartment and may not be a co-owner of more than 50% of another property or right to use or enjoy another apartment.
- Reduced tax rate of 2%: If the actual or declared value (if higher) of the real estate property acquired is equal to or less than EUR 270,151.20 and the property represents the acquirer’s main residence at the time of acquisition. This applies under the following conditions:
- The purchaser is under 36 years of age and the apartment is the first apartment in which he/she acquires at least 50% of the full ownership or the right of use or enjoyment.
- The acquirer is entitled to the minimum amount for disabilities of ascending or descending in the last tax period of the income tax whose filing deadline has expired.
- The property purchased must be the main residence of a parent or parents living with the child or children in parental care in a large or single-parent household, and the actual or declared value of the home must not exceed EUR 350,000. In this case, the tax rate of 2% applies to the first 270,151.20 euros and 8% to the remainder. For general single-parent families, the value may not exceed 270,151.20 euros.
- 100% tax reduction: For the purchase of real estate that is the first main residence of persons under 30 years of age or persons with a disability of at least 33%, if the following conditions are met:
- a) The acquirer must have had his habitual residence in the Balearic Islands in the three years prior to the acquisition.
- b) The apartment must be the first apartment in which the purchaser acquires at least 50% of the full ownership.
- c) The purchaser may not be a co-owner of more than 50% of another property or right to use or enjoy another apartment.
- d) The acquired dwelling must be the main residence as defined and required by income tax regulations and must remain so for three years. The apartment may not be transferred during this period.
- e) The purchase price of the apartment may not exceed 270,151.20 euros.
At Lucas Froese Real Estate, we provide comprehensive advice on all aspects of this tax to ensure that you are fully informed and do not miss out on any tax benefits.
