If you’re thinking of buying a property in Mallorca, you’ve probably come across the abbreviation ITP without being entirely sure what it means or how much it will cost you. Understanding what the ITP is and how it’s calculated is one of the essential steps before signing any sale agreement, as it can make a difference of several thousand euros depending on the value of the property. In this article, we explain, in simple terms, what this tax involves, how it is calculated in brackets and what tax reliefs are currently available in the Balearic Islands.
What exactly is ITP?
The ITP, or Property Transfer Tax, is a regional tax levied on the sale of second-hand properties between private individuals. Unlike new-build properties, which are subject to VAT, the ITP applies when a property is purchased that has previously had an owner. In the Balearic Islands, it is the buyer who must pay this tax, and it is administered by the Agència Tributària de les Illes Balears (ATIB).
How is the ITP calculated in Mallorca?
The Balearic Islands apply a progressive, banded tax model, rather than a single percentage applied to the total purchase price. This means that each price band is taxed at a different rate, and only the portion of the price falling within each band is subject to that rate. The current scale is as follows:
- Up to €400,000: 8%
- From €400,000 to €600,000: 9%
- From €600,000 to €1,000,000: 10 per cent
- From €1,000,000 to €3,000,000: 12%
- From €3,000,000: 13%
For example, if you buy a property for €500,000, you do not pay 9 per cent of the total: you pay 8 per cent on the first €400,000 and 9 per cent on the remaining €100,000. This distinction is key to understanding what the ITP is and how it is calculated correctly, as many buyers mistakenly assume that a single rate is applied to the total price.
Are there any tax reliefs or reduced rates under the ITP?
Yes. Although the standard rate ranges from 8% to 13%, the Balearic Islands offer reduced rates for certain categories of buyers purchasing their main residence:
- Young people under the age of 36: reduced rate of 2 per cent.
- Large families: they too can benefit from a 2% rate.
- People with disabilities: specific concessions are available depending on the recognised level of disability.
These tax reliefs are subject to property value limits in order to apply, and from March 2026 the threshold in Mallorca stands at €307,089. Above that amount, the excess is taxed at the applicable standard rate, so it is advisable to review each case carefully before assuming that the reduced rate applies to the entire transaction.
Is ITP always payable when buying a property?
Not always. The ITP applies to second-hand properties, but if you are buying a new-build property in Mallorca directly from a developer, the transaction is subject to VAT (10 per cent) plus Stamp Duty (AJD), rather than the ITP. This difference is important when comparing the actual cost between an existing property and a new-build project, as the tax burden is calculated differently in each case.
When and how is the ITP paid in Mallorca?
Payment of the ITP is made using Form 600, which must be submitted within one month of the date of signing at the notary’s office. It is the buyer’s responsibility to submit the self-assessment to the ATIB, together with the public deed of sale. Failure to meet this deadline may result in surcharges, so it is advisable to bear this in mind from the very start of the transaction.
Why is it important to work out the ITP accurately before buying?
Understanding what the ITP is and how it is calculated before finalising a transaction enables you to anticipate the actual cost of the purchase and avoid last-minute surprises. In higher-value transactions, such as the purchase of luxury villas in Mallorca, the difference between applying the tax brackets correctly and calculating them approximately can amount to several thousand euros; it is therefore advisable to seek specialist advice before signing.
What other costs need to be taken into account apart from the ITP?
Property Transfer Tax (ITP) is not the only cost associated with buying a property in Mallorca. It is also worth allowing for notary fees, registration with the Land Registry and, where applicable, administrative agency fees. Adding up all these items, in addition to the ITP, gives a much more realistic picture of the total cost of the transaction, whether for a second-hand property or a new-build project.