The annual property tax in Spain is called IBI (Impuesto sobre Bienes Inmuebles). The good news for US buyers is that Spanish property taxes are generally much lower than in the United States. In Mallorca, the IBI typically ranges from 0.4% to 1.1% of the property’s “Cadastral Value” (which is usually much lower than the market purchase price).
Understanding Your Annual Tax Obligations
American buyers are often pleasantly surprised by the low carrying costs of real estate in Spain compared to states like New Jersey, Texas, or California. However, as a non-resident owner, you have two main annual tax obligations regarding your property:
1. The Local Property Tax (IBI)
This is paid once a year (usually between September and November) to the local town hall (Ayuntamiento) of your property’s municipality, such as Ses Salines or Santanyi. It covers local services like street lighting and infrastructure. For a luxury finca, this might range from €800 to €2,500 per year, depending on the exact size and zoning of the land.
2. Non-Resident Imputed Income Tax (IRNR)
If you own a property in Spain, do not rent it out, and are not a Spanish tax resident, the Spanish tax authority (Hacienda) assumes you derive a “benefit” from owning it. You must pay an annual tax based on a small percentage (usually 1.1% to 2%) of the cadastral value, taxed at a flat rate of 24% for non-EU citizens.
The Villas y Fincas Mallorca Angle
Missing a tax payment because the letter was sent to your empty Spanish villa while you were in the US is a common headache. We help our buyers set up automatic direct debits (domiciliación) from their Spanish bank accounts for the IBI, and we connect you with local tax representatives who will file your non-resident taxes on time, every time.
Disclaimer: The information provided is for educational purposes and does not constitute tax advice. Always consult a Spanish tax lawyer or Gestor for your specific situation.
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