Anyone selling a high-value property in Mallorca should consider the tax aspects early on. It is not only at the notary appointment that it is decided how much liquidity actually flows in: capital gains tax, municipal Plusvalía, the 3% withholding for non-residents, mortgage cancellation and deductible costs all interact. This article provides a structured overview and does not replace individual tax advice.

The main tax areas

When selling a property in Mallorca, two tax areas generally need to be examined: the taxation of the capital gain at the state level and the municipal land value increase tax, the Plusvalía municipal. In addition, there are practical deductions at closing, especially the 3% withholding if the seller is not tax resident in Spain.

For international owners, the first question is therefore not the purchase price alone, but the tax status of the seller: resident, non-resident, natural person, company, co-ownership community or structure with foreign connections. The following principles mainly refer to natural persons without a permanent establishment in Spain; complex ownership structures require separate examination.

Capital gains tax: What is taxed?

In principle, the profit from the sale is taxed. Simply put, this results from the sale price minus the tax acquisition cost and the deductible selling costs. According to the Spanish tax administration, the acquisition cost includes, among other things, the original purchase price, ancillary acquisition costs, acquisition taxes paid, as well as verifiable investments and improvements. Pure maintenance or repair costs are to be distinguished from this.

The disposal value is the actual sale price achieved, reduced by costs and taxes directly incurred by the seller from the transfer. For high-value properties, documentation is crucial: the purchase deed, tax assessments, notary and registry costs, agent fees, invoices for genuine improvements, building permits and evidence of rental periods should be organized before marketing begins.

Non-residents: IRNR, Modelo 210 and 3% withholding

If the seller is not tax resident in Spain and sells a Spanish property, the profit is generally subject to Spanish non-resident income tax, the IRNR. The tax rate stated by the Agencia Tributaria for such property gains is 19 percent.

When acquiring a Spanish property from a non-resident seller, the buyer is obliged to withhold 3 percent of the agreed purchase price and pay it to the Spanish tax authorities. This withholding is not an additional tax for the buyer, but an advance payment on the possible tax of the non-resident seller. The buyer submits Modelo 211 for this; the seller later needs the proof for Modelo 210.

If the withholding retained is higher than the tax actually owed, the seller can apply for a refund of the excess. If it is lower, the difference must be paid. Especially for luxury properties with a high purchase price but low taxable profit, the withholding can be significantly higher than the final tax.

Residents: IRPF and possible special rules

If the seller is tax resident in Spain, the property gain is generally declared in the Spanish income tax, IRPF. Gains from the transfer of assets belong to the savings base. For the tax year 2025, the Agencia Tributaria states a combined scale of 19, 21, 23, 27 and 30 percent for the savings base; for the respective year of sale, it should be checked before filing the return whether the rates have remained unchanged.

For residents, special exemptions may be relevant, such as the sale of one's own main residence by persons over 65 years of age or reinvestment in a new main residence. A reinvestment rule for the former Spanish main residence may also be considered for certain non-residents from EU or EEA countries. These cases are highly dependent on individual circumstances and should be examined before signing.

Plusvalía municipal

The Plusvalía municipal is the municipal tax on the increase in value of urban land. It does not affect the building value as such, but the land value according to the cadastre. The respective municipality is responsible; in many municipalities of the Balearic Islands, the calculation, declaration or payment is handled via the ATIB.

In the case of sales for consideration, the seller is generally liable for the tax. However, if the seller is a natural person without residence in Spain, the buyer can act as a substitute taxpayer according to the Spanish municipal tax law. In practice, it is therefore often regulated in the purchase contract whether and to what extent an amount for the Plusvalía is withheld.

Since the reform following the case law of the Constitutional Court, a sale without demonstrable increase in value is generally not subject to Plusvalía if the lack of increase in value is properly declared and proven. In addition, the taxpayer can demand that the actual lower increase in value be applied instead of the objective calculation.

Mortgage cancellation and costs

A repaid mortgage does not automatically disappear from the land register. For the registry cancellation, a notarial cancellation deed and registration in the Registro de la Propiedad are generally required. If the outstanding debt is only paid off from the sale proceeds, the notary usually coordinates the bank certificate, payment and cancellation.

From the seller's perspective, the following may also be relevant: agent commission, legal or tax advice, energy certificate, updating technical documents, seller's notary costs, mortgage cancellation costs, land registry costs, Plusvalía municipal and the ongoing settlement of IBI, community fees or utility charges up to the transfer. Not every expense is automatically deductible for tax purposes; the connection, evidence and specific type of tax are decisive.

Practical checklist

Clarify tax residence for the year of sale and keep evidence ready.
Collect purchase deed, acquisition tax, notary and registry costs.
Document investments and improvements with invoices and permits.
If rented, check tax-deductible depreciation.
Simulate Plusvalía municipal with cadastral value and municipal parameters.
For non-residents, reflect the 3% withholding in the purchase contract and payment flow.
Organize the outstanding mortgage including cancellation deed and registry costs in advance.
Request Modelo 211 from the buyer and monitor the deadline for Modelo 210.

Conclusion

When selling a property in Mallorca, the tax deduction at the notary is only part of the picture. What is crucial is whether capital gains tax, Plusvalía, withholding and costs have been properly calculated before signing. International owners of high-value properties should therefore not only optimize the sale price, but plan the net proceeds after tax.

Taxes When Selling a Property in Mallorca