Further tax benefits when purchasing property in Mallorca

Anyone who purchases a property in Mallorca, Menorca or Ibiza between 12 May and 31 December 2012, pays on a later sale 50% less in capital gains tax. However, this regulation applies only to properties that are classified as “Urbano”. The distinction between “Urbano” (properties in urban and community areas) and “rustic”,  i.e. rural properties such as Fincas, is determined by the respective municipalities and usually depend on the particular plot size. Your Porta Mallorquina broker would be pleased to inform you if your dream property is covered by the new tax regulations.

Buying is worthwhile for residents and non-residents

The tax reduction applies to residential property, which is purchased by residents, non-residents or businesses.  The date of purchase is important, the resale is not time limited.

The current income tax rates for non-residents (as of June 2012) are as follows:

• capital gains tax for property sales in 2012 and 2013: 21%
• capital gains tax for property sales in 2014: 19%

For residents, the tax is spread out. Untill the end of 2013, the following rates of taxation apply:

• capital gains up to 6.000, – €: 21% tax
• capital gains over 6,000, – €    up to 24.000, – €:    25% tax
• capital gains over 24,000, – €:  27% tax (from 2014 onwards: 21%)

This benefit also applies to companies that are incorporated, in this case the profit is taxed at only 15%. Instead of 30%.