NEW REGULATIONS FOR REAL ESTATE AGENCIES IN MALLORCA AND THE REST OF THE BALERIC ISLANDS
Law 3/2024 came into effect November 2024 and aims to enhance professionalism and consumer protection in the real estate industry.
The key aspects of these new regulations are:
Registration requirements
Real estate agents operating in the Balearic Islands must now register with the Official Real Estate Registry of the Balearic Islands (ROAIIB)
To be eligible for registration, agents must meet several criteria:
- Physical address: Agents must have a publicly accessible office with a postal address in the Balearic Islands.
- Professional qualifications: Agents must demonstrate their expertise through minimum one of the following:
- A university degree in relevant fields such as law, engineering, or architecture
- At least 200 hours of specialized training in real estate
- A minimum of 4 years of experience in the real estate sector
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Insurance Requirements:
- Liability insurance
- Casualty insurance
Consumer protection measures
The new regulations emphasize transparency and consumer protection:
- Agents must provide detailed information about properties and assist clients in obtaining additional information from relevant sources.
- All real estate contracts must include the agent's official registration number.
- Agents must clearly establish marketing conditions through signed agreements with sellers.
Compliance and enforcement
- Non-compliance with these regulations is considered illegal and may result in sanctions.
- The regulations aim to eliminate "amateur agents" and ensure only qualified professionals operate in the market.
W Mallorca Invest's compliance
- 250 hours course on legislation on real estate and land and sale of these, in addition legislation on rental properties
- In June 2024, 5 years of proven experience in the real estate sector in Mallorca
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Operated by TodoWanre S.L.
- Membership number 00663 in ANAI/API (Asociación Nacional de Agentes Inmobiliarios y el Colegio Oficial de Agentes de la Propiedad Inmobiliaria)
- Registered in the official ROAIIB with number GOIBE605090/2024
This information assures clients that W Mallorca Invest meets the new legal requirements and is committed to professional standards in the Balearic real estate market.
Taxes when buying a property in Mallorca 2025
Property Transfer Tax (ITP)
When purchasing a second hand property in the Balearic Islands, this is subject to Property Transfer Tax (ITP). The determination of tax rates is the responsibility of the individual municipalities.
The following Property Transfer Tax applies:
- Up to €400.000: 8%.
- €400.001 – €600.000: 9%.
- €600.001 – €1.000.000: 10%.
- €1.000.001 – €2.000.000: 12%.
- €2.000.001 and above: 13%.
Additionally there is a Stamp Duty of 1,5% for properties valued up to €1.000.000 and 2% for properties over €1.000.000 €. Important to note is that these taxes must be paid withing 30 days of the property transfer.
For example, with a purchase price of €1.000.000 the tax is as follows:
- For the amount up to €400.000: The tax is 8% = €32.000.
- For the amount between €400.001 and €600.000: The tax is 9% = €18.000.
- For the amount between €600.001 and €1.000.000: The tax is 10% = €40.000.
- ⇒ The total tax amount is €90.000.
Garage spaces
For a garage space in a second hand residential building you pay a Property Transfer Tax of 8% up to €30.000 and 9% for values over €30.001.
Value Added Tax (IVA)
When buying a new built property you will not pay any Property Transfer Tax (ITP) as when purchasing a second hand property. Instead, you have to pay Value Added Tax (VAT or IVA in Spanish).
For new or fully renovated properties, a 10% Value Added Tax (VAT) applies.
For garage spaces in new residential properties, including up to 2 parking spaces the VAT is also 10% of the purchase price.
Notarial or Stamp Duty
The notarial or stamp duty in the Balearic Islands is 1.5%. If the purchase price exceeds €1.000.000, the tax rate increases to 2%. Payment of stamp duty must be made within one month of signing the notarial deed.
Property tax – Impuesto de Bienes Inmuebles – IBI
This tax varies depending on the specific property and municipality. The annual property tax (IBI) is based on the cadastral value of the property and it´s paid to the local town hall.
This tax contributes to maintaining the local infrastructure, the amount varies, but is generally a manageable cost.
Tax on waste collection/recycling – basura
This is a garbage and recycling tax aiming to reduce waste in accordance with European directives. The tax is paid to the town hall and is a relatively small cost. To find out exact figures, we recommend contacting the local town hall where the property you want to buy is located. This tax will, in accordance with new EU directives, change in 2025. When the change is determined and there is official information, we will post it here.
Wealth tax
In Spain, wealth tax is calculated based on the value of your assets as of the 31st of December each year. If you are a resident in Spain, it applies to your worldwide assets. For non-residents, it affects Spanish assets only.
The tax is payable on the net value of most of your capital assets, such as real estate, savings and investments, shares, art, antiques, cars etc.
Couples owning assets in joint names can effectively double the allowances although they submit separate returns.
With the increased threshold above €3 million the different rates for different levels of wealth have also been adjusted.
Individuals will pay tax of 2.35% for the excess up to €5,454,958, above that figure the rate is 2.9%, and above € 10,909,915 the rate is 3.45%.
Tax on inheritance and gifts - Balearic Islands
Like many countries, Spain applies an inheritance tax when assets are passed from one person to another, either on death or as a lifetime gift.
In the Balearics, with effect from July 2023, succession tax liability is reduced by 100% for group I and II beneficiaries. This means that your spouse, children, grandchildren and parents do not pay any tax when receiving inheritances or gifts from you. Likewise, you won’t pay tax if you receive an inheritance or a gift.
If you do not have children and pass assets to a brother, sister, nephew, niece, uncle or aunt, their succession tax liability is reduced by 50%. In the absence of other descendants, stepchildren and in-laws may benefit from a 25% reduction.
Imputation of real estate income
All foreigners who own a property in Spain must declare for having an empty home that is not a first residence. The Treasury/Hacienda considers that any property that is not a first home is capable of generating income or revenue, and this also includes garages.
As a non-resident owner of property in Mallorca, you are required to file a Declaración de la Renta every year, even if you do not have any rental income or capital gains to report. Payments of non-resident tax for rental income and capital gains are due on a quarterly basis, with the first payment due by April 30th of the year following the tax year and the remaining payments due on July 30th, October 30th, and January 30th of the following year. It's advisable to use the service of a tax adviser to prepare this.
Other considerations
- If you are a resident of an EU or EEA country or of a country with which Spain has a tax treaty, you may be eligible for reduced tax rates or exemptions from non-resident tax.
- If you rent out your property in Mallorca for less than three months per year, you may be eligible for the "imputed income" regime, which allows you to pay a flat tax rate of 24.75% on the imputed rental income rather than the progressive tax rate.
- If you sell your property in Mallorca and reinvest the proceeds in another property within two years, you may be eligible for a tax exemption on the capital gains.
- It's advisable to use the service of a tax adviser or a lawyer for more information.