IVA and AJD on new-build properties

With a new-build from a developer, you don't pay property transfer tax, but rather IVA (Spanish VAT) — plus on top of that the AJD, the tax on the notarial deed.

How much IVA and AJD do you pay on a new-build on Mallorca?

Unlike buying an existing property, the new-build isn't subject to the ITP property transfer tax, but rather to the IVA (Impuesto sobre el Valor Añadido, the Spanish VAT) — and because the purchase is subject to VAT, the AJD (Actos Jurídicos Documentados, the tax on the notarial deed) is added on top. The two add up; they don't replace one another.

On the net purchase price of a new-build, IVA is charged at a rate of 10% for residential properties — commercial units and separately purchased plots are charged at the standard rate of 21%. In addition, AJD is levied on the escritura (notarial purchase deed), calculated on the property value excluding IVA: at the standard rate of 1.5%, and above a value threshold at the increased rate of 2%. For a primary residence, young buyers or large families, the AJD rate is reduced under certain conditions; the calculator above gives you the exact amount for your case.

How the calculation works

Unlike an existing property, which is subject to the progressively tiered ITP property transfer tax (more on this in our guide ITP in the Balearics), a new-build is calculated in two separate steps. First the IVA: it is charged on the agreed net purchase price — for residential properties, including the associated parking spaces, at the reduced residential rate; for commercial units, separately purchased plots and additional parking spaces, at the standard rate. Then the AJD: its assessment basis is not the invoice amount including IVA, but the value of the property itself — the IVA is not included in the AJD base. This is one of the points where buyers regularly miscalculate, because they intuitively assume the total amount shown on the invoice.

The notary applies the standard AJD rate to this base, unless the value reaches the threshold for the increased rate — in which case the higher rate applies to the entire base, not just the portion exceeding it. This is what distinguishes the AJD threshold for new-builds from the ITP tier system for existing properties, where only the portion exceeding each threshold is taxed at the higher rate: the AJD is a genuine cut-off point, not an average rate.

Things get complicated with the reductions, because two different figures come into play there, which are easily confused. The first is the access threshold — on Mallorca €331,859.70, on Menorca €331,859.70, on Ibiza €378,211.68 and on Formentera €378,211.68 — below which a reduction can be considered at all. The second is the cap of €270,151.20: the portion of the value up to which the reduced rate actually applies. Both figures come from different regulations and do not coincide. If the property value is above the access threshold, the reduction is lost entirely; if it is below that but above the cap, the reduced rate only applies up to the cap, with the remainder taxed at the standard rate. This is the most commonly misunderstood point regarding AJD in the Balearics — and that is precisely why the calculator above checks both thresholds separately.

Worked examples

Below the calculator above you'll find three worked-through cases: the same new-build flat twice — once with the reduction for under-30s, once with no reduction at all — and a building plot, for which the standard IVA rate applies. Enter your own purchase price, your island and your buyer profile to see the precise breakdown of IVA, AJD and any possible savings for your case; the specific figures are provided solely by the calculator, not by this text.

Special cases

The basic calculation in the calculator above covers the standard case: a new-build residential property in its first sale by the developer, with no reduction applied. Several scenarios differ from this and deserve a closer look.

• Higher rate from the value threshold: If the AJD base reaches the value threshold of €1,000,000 — it does not need to exceed it —, the rate for the entire base rises from the standard rate of 1.5% to the higher rate of 2%. In Mallorca's premium segment, this is more the rule than the exception.
• Reduced rates for the primary residence: If the new-build flat becomes the owner-occupied main residence, the rate drops to 1%. For buyers under 36, for people with disabilities, and for large families and single-parent families, it drops further to the super-reduced rate of 0.5%. Both rates assume that the base does not exceed the access threshold of the respective island, and each applies only up to the cap — the portion exceeding it is taxed at the standard rate.
• Reduction for under-30s and people with disabilities: Under additional conditions, the tax liability is waived entirely up to the cap — a reduction of 100%. This reduction is tied to seven conditions simultaneously, which you confirm via the profile selection in the calculator:
  1. at least three years of habitual residence in the Balearics before the purchase,
  2. it is your first home with at least half full ownership,
  3. you do not already hold at least a half share in any other home,
  4. the home will become your vivienda habitual (permanently self-occupied main residence),
  5. the property value exceeds neither the cap nor the access threshold,
  6. your taxable base for IRPF (Spanish income tax) remains below €52,800 for individual assessment, or €84,480 for joint assessment,
  7. and — the point where many buyers fail — you finance at least 60% of the appraised value via a mortgage loan. Those who pay in cash do not meet this condition and therefore do not receive the reduction, even if all the other six points are met.
• Reduction for price-controlled homes: The law recognises two categories for this — the vivienda de precio tasado and the vivienda de precio limitado (VPL). For this category, the tax liability is reduced by 50% — unlike the previous reductions, without a cap, meaning it applies to the entire taxable base.
• Different value limit for large families and single-parent families: For this group, the access threshold is not the normal island limit, but is raised by 15% above it. An exception to this exception applies to single-parent families of the categoría general (the general, not the special classification): for them, the increase does not apply. The ordinary value limit of their island remains in place — the same one that applies to the other reductions.
• Land and commercial unit: A separately acquired building plot and commercial units are subject to the standard IVA rate of 21% instead of the reduced housing rate — regardless of whether they are acquired in the same transaction as a dwelling.
• Buying land and having it built yourself — not everything at the standard rate: Anyone who acquires the land and then commissions the construction themselves does indeed pay the standard rate on the land, but on the construction contract the reduced rate of 10% applies. The requirement is a contract concluded directly between the developer/owner and the construction company for a building that is predominantly used for residential purposes — predominantly here means: at least half of the built-up area (Art. 91.Uno.3.1º LIVA). Anyone who calculates both items flat-rate at the standard rate ends up paying significantly too much on the construction portion.
• The third parking space and the storage room: The reduced IVA housing rate only covers two parking spaces per residential unit; for each additional one, the standard rate applies to that portion of the purchase price. A storage room (trastero) on the other hand counts as an ancillary room to the dwelling, as long as it is located in the same building and is transferred together with it — if it is located elsewhere or is purchased separately, it is subject to the standard rate. Commercial premises never count as an ancillary room, even in the case of joint transfer.
• New-build declaration and division as separate deeds: The declaración de obra nueva (new-build declaration) and the división horizontal (division into horizontal property) are separate notarial deeds subject to registration, each with its own AJD. When buying a finished dwelling from the developer, the developer has already borne these costs; anyone building themselves bears them in addition to the AJD on the purchase contract. The calculator above reflects the purchase deed, not these two.
• Instalment payments in an off-plan purchase: If you buy off-plan and pay in instalments, the IVA arises with each payment on account, whereas the AJD only arises with the notarial deed — two different points in time within a single purchase. The calculator deliberately works with a single reference date; if your instalments and the notarial deed fall within years with different legal frameworks, the result is an approximation, and your tax adviser is the right person to consult.
• Several buyers, of whom only one is entitled to the benefit: The benefits are personal in nature and apply to the respective share of acquisition. If a couple buys jointly and only one person meets the requirements, the benefit only applies to that person's share. The calculator above reflects a single buyer.
• The 5,000-square-metre limit: In connection with new builds, a size limit for developed adjoining land is sometimes mentioned (Art. 20.Uno.22º LIVA). However, this limit does not concern the new build, but the second transfer — the resale of an already existing detached villa: it limits how much developed adjoining land the IVA exemption for the resale still covers. For your new-build purchase, it is not relevant.
• AJD on the mortgage deed: If you finance the new build via a mortgage, its notarial constitution and land registry entry are also treated as a separate documented legal act and may additionally be subject to AJD — independent of the AJD on the purchase deed itself. Anyone planning financing should budget for this item separately; more on this in our guides on mortgages for non-residents and on the comparison of fixed vs. variable-rate mortgages.
• AJD on other deeds: Other notarially certified and registration-required transactions relating to the property — such as later amendments or supplementary agreements — can also be subject to AJD in their own right, independent of the purchase itself.
• The valor de referencia (cadastral reference value) as a floor: The assessment basis is, in principle, the value declared in the deed. However, it may not be lower than the valor de referencia. If this official reference value exceeds the agreed price, it takes precedence — this is the most common trigger for additional claims from the ATIB (Balearic tax authority).

None of these special cases is automatically checked for you in the calculator, unless you select the matching profile — if in doubt, clarify your individual case with your gestoría (administrative office that handles dealings with the authorities) or a tax advisor before signing the deed.

Deadlines and forms

AJD is not assessed automatically; instead, it is calculated and filed as a self-assessment via Modelo 600 (tax form for self-assessment) with the ATIB. The deadline for this is one month from the date of the taxed legal transaction — for a straightforward purchase, from the date of the escritura; for an additional mortgage, from the date of its own deed.

1. Notarial execution of the purchase contract (escritura) or the mortgage before a notary of your choice on Mallorca.
2. Determination of the assessment basis: the value stated in the deed, but at least the valor de referencia from the cadastre.
3. Calculation of IVA and AJD according to the legal position applicable in the Balearics, carried out by the notary, gestoría, or tax advisor.
4. Self-assessment and payment via Modelo 600 with the ATIB.
5. Submission of the payment confirmation to the Land Registry (Registro de la Propiedad) for registration.

A second, considerably smaller item also falls due on the deed itself: the cuota fija — a fixed charge per completed sheet of the official stamped paper (papel timbrado), currently €0.30 per sheet. It is independent of the property value and applies to every notarial deed, even when no value-based AJD is owed at all. The actual, value-based AJD — the one calculated by the calculator above — is, by contrast, called the cuota gradual. Both items are legally separate and are charged side by side on the same deed.

Since deadlines and procedural details can vary depending on the notary's office and municipality, it is worth coordinating early with your gestoría or your Lawyer for property purchase in Spain, to ensure payment is made on time.

Common mistakes

1. Confusing AJD with ITP. Resale property means ITP, new build from the developer means IVA plus AJD. Both never apply at the same time — a misclassification distorts the budget massively.
2. Forgetting the AJD alongside the IVA. Anyone who only includes the IVA in their financing plan regularly overlooks that the AJD is added as a separate item.
3. Confusing the AJD on the purchase deed and the mortgage deed. With simultaneous financing, the AJD is charged twice — once on the purchase deed, once on the mortgage deed. Both items belong separately in the budget.
4. Equating the access threshold with the cap. The value limit above which a benefit is completely lost, and the portion of value up to which the reduced rate applies, are two different figures from different regulations — not the same thing.
5. Expecting the bonus for under-30s without a mortgage. Anyone paying in cash fails to meet one of the seven requirements and does not get the bonus — regardless of age or the other criteria.
6. Treating the increased AJD rate like a tiered scale. Unlike the ITP on resale properties, once the value threshold is exceeded, it is not just the excess portion that is taxed at the higher rate, but the entire base.
7. Applying the 5,000-square-metre limit to new builds. This area limit from the VAT law concerns the resale of a single-family villa, not the first sale by the developer.
8. Treating the construction contract like the land. The land and the construction contract are subject to different rates — anyone who calculates both at a flat standard rate significantly overestimates the tax on the construction portion.
9. Checking the cadastral reference value only after the purchase. If it exceeds the purchase price, it becomes the tax base — and it additionally determines whether a benefit is even still available. Both can be checked in advance, not negotiated retroactively.
10. Using outdated rates from old sources. Rates, caps and value limits change by law and decree; rely on the legal status that the calculator updates with every change in legislation, not on older articles or rules of thumb.

Legal basis and status

The IVA on new builds is based on the national Ley 37/1992 (LIVA) — Art. 90 for the standard rate, Art. 91 for the reduced housing rate, and Art. 20.Uno.22º for the distinction from second transfer. The AJD is regulated in the Balearic Decreto Legislativo 1/2014: Art. 15 (standard rate), Art. 17 (reduced and super-reduced rates), Art. 17 bis (increased rate), Art. 19 quater (bonus for under-30s and people with disabilities), Art. 19 quinquies (bonus precio tasado), as well as the Disposición adicional quinta, which brings together caps and value limits. The tax base and cuota fija arise from the national Real Decreto Legislativo 1/1993 (Art. 30 and Art. 31). Below the result in the calculator above you will find the exact legal status along with linked original sources — a separate list of sources here would only become outdated, while the calculator stays current with every change in legislation.

Frequently Asked Questions

What comes next?

After payment of IVA and AJD and registration in the Land Registry, the property purchase is not yet complete for tax purposes: as an owner in Mallorca, further ongoing charges apply, most notably the annual property tax IBI. Anyone wishing to let the property should also familiarise themselves with the tax obligations on rental income as a non-resident, and when it comes to a later sale, different taxes again become relevant. An overview of all the items involved in a purchase is provided by the guide Buying property in Mallorca; all tax and legal topics relating to your property are gathered in the section Taxes & Law. Specific starting points:

• IBI tax Spain — the annual property tax after the purchase
• Foreign buyers in Mallorca — special considerations for buyers without Spanish residency
• Purchase incidental costs Mallorca — the full overview of all items besides IVA and AJD

Checklist before signing the deed

These points should be ticked off before you sit down with the notary:

• New-build or resale clarified → correct tax (IVA + AJD vs. ITP) accounted for
• Type of property checked: flat, commercial unit, plot of land or additional parking space
• Valor de referencia of the land registry checked (higher than the purchase price?)
• Value threshold for the increased AJD rate taken into account
• Entitlement to a discount checked — access threshold AND cap considered separately
• For the reduction for under-30s: all seven conditions gone through individually, in particular the mortgage loan
• If financing: AJD on the mortgage deed planned for separately
• Modelo 600 deadline in the calendar (one month from signing, ATIB)
• Lawyer or gestoría instructed for the submission