A property on Mallorca can generate rental income, but the realistic return is usually significantly lower than the gross figure from listings or rental forecasts. What matters is not just the achievable daily rate, but the combination of occupancy, season, license situation, management, maintenance, taxes, and financing.

Gross Return Is Only the Beginning

The gross return relates annual rental income to the purchase price or, better, to the total acquisition costs. More meaningful is the net return before financing: income minus ongoing costs, maintenance, and management, related to the purchase price plus ancillary acquisition costs, furnishings, and initial investments.

For existing properties, ITP at progressive rates generally applies in the Balearic Islands; notary, land registry, legal advice, valuation, financing costs, furnishings, and initial repairs are added.

Occupancy and Season

Demand is high in summer, but returns are generated throughout the year. IBESTAT reports an average occupancy rate by places of 59.08 percent for tourist apartments on Mallorca in 2025. In July 2025 it was 75.92 percent, in January only 23.36 percent. Anyone calculating seriously should factor in weaker months, vacancy days, cleaning windows, maintenance, and personal use periods.

Holiday Rental or Long-Term Rental?

Holiday rental can bring higher gross income but is operationally more expensive and more heavily regulated. Platform fees, guest communication, check-in, cleaning, laundry, utility costs, higher wear and tear, marketing, and short-term cancellations must be considered. Long-term rental usually has lower gross income but fewer changes, lower operational complexity, and often more predictable occupancy.

ETV License: Value Factor and Risk

An existing, valid ETV license can support the value because new tourist places are severely limited. For buyers, this means: do not count on a future license, but have zoning, register entry, place capacity, term or renewal, community restrictions, municipal limitations, and previous rental history verified.

The Most Important Cost Blocks

Acquisition: ITP or for new builds IVA/AJD, notary, land registry, lawyer, bank and valuation costs.
Ongoing: IBI, garbage fees, comunidad, insurance, internet, electricity, water, pool, garden, and property management.
Holiday rental: Platform fees, payment processing, cleaning, laundry, guest care, key service, accounting, and marketing.
Maintenance: Air conditioning, humidity, salt air, furniture, appliances, painting, and technical systems.
Vacancy: Weak months, cancellations, maintenance, renovation, personal use, and regulatory interruptions.

Taxes and Financing

Rental income from Spanish properties is taxable in Spain. For non-residents, IRNR generally applies 19 percent for taxpayers resident in the EU, Iceland, Norway, or Liechtenstein and 24 percent for other taxpayers; cost deductibility depends on status. For tourist rentals, it must also be checked whether hotel-like additional services trigger VAT.

Financing massively changes the return. A property can have a positive return before financing and negative cash flow after interest and repayment. For the calculation, an interest rate increase of one to two percentage points should be planned as a stress test.

Conservative Sample Calculation

Item	Holiday Rental with ETV	Long-Term Rental
Purchase price	600,000 EUR	600,000 EUR
ITP, ancillary costs, furnishings, start reserve	78,000 EUR	58,000 EUR
Total investment	678,000 EUR	658,000 EUR
Annual gross	150 nights x 260 EUR = 39,000 EUR	2,000 EUR x 12 = 24,000 EUR
Ongoing costs before tax	28,800 EUR	9,000 EUR
Net before tax and financing	10,200 EUR	15,000 EUR
Gross return	5.8%	3.6%
Net return before tax and financing	1.5%	2.3%

Holiday rental appears more attractive gross, but loses significantly in net return due to management, utility costs, cleaning, platforms, and higher maintenance. If financing is added, cash flow can become negative despite rental income. Value appreciation can occur but should not serve as a substitute for a viable rental calculation.

Check Questions Before Purchase

Is the return calculated on the purchase price or total costs?
Are weak months, vacancy, maintenance, and personal use included?
Is an ETV license available, valid, and transferable?
Which costs remain with the owner?
How does the result change after tax and financing?
Does the calculation remain viable even with 10% less income, 15% higher costs, or higher interest rates?

Realistically Assessing Returns