Buying and selling a property in Mallorca (residential property in general, house, villa, terraced house, flat, apartment, garage, land house, olive grove, commercial unit, etc.) is one of the most common property transactions in the Balearic Islands, but also one of the most risky if you approach it without a clear plan. In this article, I clearly and practically explain the essential steps of a property transaction so that you can protect your interests at all times.
Preliminary requirements: choose the area and the type of property carefully
Before considering buying and/or selling a property in Mallorca, you must ensure that the plot matches your project (single‑family home, business, renovation, investment, etc.). You should review the local planning instruments (PGOU or General Urban Development Plan) and the island planning (Territorial Plan of Mallorca) to confirm the land classification and that it allows the building capacity you are looking for.
Do not be misled by the summer weather or advertising photographs. Make sure you visit the same property in different seasons and at different times of the day. It is not the same to view a property in the bright summer sun as on a rainy winter day. Therefore, you should carefully check:
- Public transport and road access.
- Nearby services: schools, health centre, shops, leisure facilities, beaches, etc.
- Noise, views and possible planning restrictions: distances, building heights, restricted tourist use, etc.
- Neighbourhood and owners’ community.
Seek technical and legal advice
Once you have found the “finca” of your dreams, you should not embark alone on such a financially significant transaction: when buying and/or selling a real estate in Mallorca, it is always advisable to commission a due diligence from two experts:
- An architect or quantity surveyor to verify the legality of the existing constructions, the building permit, the certificate of habitability and any possible infringements or unauthorised buildings.
- A lawyer specialised in property and planning law to verify:
- Easements (rights of way, supply lines, pipelines, etc.).
- Registered encumbrances (mortgages, attachments, prohibitions on sale).
- Local regulations and those of the Autonomous Community of the Balearic Islands.
Documentation required from seller and buyer
When buying and selling a property in Mallorca, both parties should prepare a set of documents in advance.
Typical documents from the seller:
- Title deed registered at the Land Registry. This is the document that entitles the seller to sell the property. Example: purchase deed, power of attorney, deed of acceptance of inheritance, legacy deed, etc.
- Recent Land Registry extract (nota simple). It is important that it is up to date. It is obtained directly from the Spanish Land Registry. As this is public information, anyone can access the information relating to a property.
- Where there are constructions: Certificate of habitability, building permit, floor plans of the property, stamped by an officially recognised architect in Spain or by the relevant Architects’ Association.
- Energy performance certificate.
- The last 4 payment receipts for Property Tax (IBI) and refuse collection charges.
- Urban planning certificate or planning report relating to the property.
- Certificate confirming that there are no planning infringements.
- If the property forms part of an owners’ association: certificate confirming that the seller is up to date with community fee payments.
Typical documents from the buyer:
- Identity document (DNI/NIE) and, where applicable, passport, all valid.
- Tax Identification Number (NIF) and, where applicable, certificate of non‑residence.
- Military permit: if the buyer is a national of a country outside the European Union or the European Economic Area and wishes to acquire a rural property (finca rústica) in the Balearic Islands, they must first apply for a military authorization from the Spanish Ministry of Defence. Please note that the processing time to obtain this authorization may take, or even exceed, 6–8 months in some cases. In order not to lose the property of your dreams, I would recommend that you include an appropriate clause in the private purchase contract preventing the seller from withdrawing without justified cause or from selling the property to a third party at a higher price while you are waiting to receive said military authorization or permit. There is a possibility that the Spanish authorities may, for whatever reason, refuse to grant you the military permit. In that case, it is essential that you have the right to demand full reimbursement of any payments made on account; otherwise, you risk losing them.
Contract negotiation and safeguards in case of breach
During negotiations on the sale and purchase contract, both parties (buyer and seller) agree on:
- Price, payment term and method of payment (cash, bank financing, penalty deposit or confirmatory deposit).
- Deadline for execution of the Public Deed.
- Conditions (for example, obtaining financing, building permit, discharge of mortgage, etc.).
This is one of the critical stages of the transaction. Do not go through it alone and make sure your investment is protected. You should contact a lawyer specialised in real estate law to accompany you throughout the entire conveyancing process.
Decide clearly what happens if either party defaults:
- If the seller or the buyer fails to comply with the agreement, what penalty must each of them face? Does any breach trigger penalties, or only certain specific breaches?
- If a deadline is missed, what penalties or interest will apply?
- If the deed cannot be executed due to force majeure, what are the consequences for the parties?
These clauses must be drafted with legal precision to avoid unpleasant surprises. It is advisable for the final contract to be prepared by a lawyer, not by an intermediary, nor by simply downloading a template from the internet or by relying on artificial intelligence.
The public deed: do not sign it without advice
Once an agreement has been reached, the date for executing the public deed before a notary will have been set. This is another critical step in the entire transaction: it is cheaper to risk a small percentage (1‑2% of legal fees) than to risk 98‑99% because of a legal or tax mistake or a mere “I thought…“. Before signing, you should carefully review the text of the deed and make sure in particular that:
- the real estate, its current owners, its size, its structures and its boundaries are correctly described;
- easements, encumbrances and special conditions are described;
- all amounts that the buyer must pay to the seller are correctly specified.
Taxes and expenses
This is the point at which buyer and seller must bear the payment of taxes and expenses. What each party has to pay depends largely on their tax residence in Spain. It is not the same to be a tax resident as a non‑resident. Here, I will limit myself to summarising the taxes involved. In another article to be published shortly, I will discuss them in detail.
Typical taxes for the buyer:
There is no distinction here between residents and non‑residents: both must pay the following taxes:
- Transfer Tax (Impuesto de Transmisiones Patrimoniales, ITP): for the purchase of a second‑hand dwelling in the Balearic Islands, a progressive scale of approximately 8‑13% applies, depending on the value of the property. You can consult the detailed table on the ATIB website.
- Value Added Tax (Impuesto sobre el Valor Añadido, IVA) + Stamp Duty (Actos Jurídicos Documentados, AJD): for the purchase of a new (brand‑new) dwelling in the Balearic Islands, that is, where the purchase is made directly from the developer, 10% VAT and approximately 1% AJD are charged.
- Notary, Land Registry and administration fees: these costs vary according to the purchase price of the real estate, but they usually range between approximately 1% and 1.5% of the purchase price.
- Retention of the capital gains tax on land value: if the seller is a non‑resident, it is highly advisable for the buyer to withhold the amount of the tax on the increase in value of urban land (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana, IIVTNU), commonly known as “municipal plusvalía“. This tax is, in principle, payable by the seller. However, if the seller is a non‑resident, the obligation to pay is reversed and it is the buyer who must pay it to the tax authorities. Hence the importance of the withholding.
Typical taxes for the seller:
Here is where a distinction between residents and non‑residents exists:
Seller resident in Spain: subject to Personal Income Tax (IRPF)
- Tax on the Increase in Value of Urban Land (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana, IIVTNU), commonly known as “municipal plusvalía“: this is the tax that a resident seller must pay, and it is calculated on the increase in the value of the land. To find out the amount, you must contact the town hall where the real estate is located.
- Personal Income Tax (Impuesto sobre la Renta de las Personas Físicas, IRPF): if the seller has made a profit on selling the real estate (compared with the acquisition price or the value declared for inheritance), they must declare that capital gain in their annual personal income tax return. A rate of approximately 19% to 28% is applied on the Balearic Islands (in progressive bands rather than on the full amount).
Seller not resident in Spain: subject to Non‑Resident Income Tax (IRNR)
- 3% Retention: If the seller is a non-resident, the BUYER (whether resident or not) must retain 3% of the final purchase price, an amount they must pay to the Tax Authority (Hacienda) on behalf of the seller.
- Non-Resident Income Tax (IRNR): A 19% rate is applied to the capital gain, subtracting the 3% that was retained. Please note that both percentages are calculated on different amounts, so it is incorrect to say “if I subtract 3% from 19%, I end up paying only 16%“. The 3% is applied to the total purchase price. In contrast, the 19% is applied to the net capital gain from the sale. If there was no capital gain, obviously you will not have to pay and can claim a refund for the retained 3%.
- Tax on the Increase in Value of Urban Land (IIVTNU): popularly known as “municipal plusvalía“. This is the tax that the non-resident seller, just like a resident, must pay, and it is calculated on the increase in the land’s value. However, if the seller is a non-resident, the tax burden is reversed: the buyer must assume the payment of the municipal plusvalía (the buyer becomes the substitute taxpayer). Therefore, in these cases, it is standard practice for the buyer to retain the amount of the municipal plusvalía. Remember: in principle, the tax must only be paid if the plot or property is classified as “urban”. If it is rural (rústico), you do not have to pay it. Contact the town hall where the property is located to find out its classification and the corresponding amount.
You can find further details on the current tax rules on the website of the Agència Tributària de les Illes Balears (ATIB), which publishes the applicable rates and bands every year.
Registration at the Land Registry
After execution of the deed, the next step when buying and selling a real estate in Mallorca is for the new buyer to be registered at the Land Registry and other relevant registries. An administrative agent (gestor) can take care of filing the deed, paying the registry fees and obtaining a new Land Registry extract in the name of the new owner. This registration is essential in order for:
- the buyer to appear as owner for all legal purposes,
- the bank to be able to create or cancel mortgages,
- the seller to cease to be registered as being responsible for the property.
Transfer of utilities and use of an administrative agency
Finally, when buying and selling a real estate in Mallorca, you must change the holder of all utility contracts:
- Water, electricity, gas,
- Waste collection and other municipal services.
Hiring a local administrative agency can save time and prevent mistakes, as they often deal directly with:
- Opening and closing utility contracts,
- Checking consumption and any outstanding debts,
- Communications with the town hall and utility companies.
Conclusion
In short, although at first sight buying and selling a real estate in Mallorca may seem straightforward, in practice it brings together urban planning, real estate law, tax law and registration issues, and it can become significantly more complex if any detail is overlooked. Professional legal advice not only helps to prevent mistakes, but also protects your investment and helps ensure that the transaction is carried out with legal certainty and transparency.
If you would like to analyse your specific case, find out which documents you need, or understand which taxes and costs would apply to you depending on your tax residence status (resident, non‑resident from the EU, or non‑EU national), you are welcome to contact me for personalised guidance on the purchase or sale of your real estate in Mallorca.
