Property purchase budget in Mallorca

How much property can you really afford on Mallorca? Your savings alone do not determine the answer: what matters is how much is left after the deposit, taxes and fees. The calculator turns the usual calculation around. Using your savings and your bank’s loan-to-value ratio, it shows the highest purchase price you can afford.

How much property can I afford on Mallorca?

Your budget is not simply your savings divided by the share of the price you have to pay yourself. The bank finances only part of the purchase price, and it does not finance the purchase costs at all: you must pay the taxes, notary, land registry and advisory fees out of your own pocket. The maximum purchase price is therefore the point at which your savings are just enough to cover the part of the price the bank does not finance and all the additional costs.

How the calculation works

The calculator reverses the usual way of thinking. Normally, you ask: if I buy at a certain price, how much will it cost me in total? Here, you ask: given the money I have available, what purchase price can I afford without coming up short when I sign before the notary?

The principle is simple. Your savings must cover two things at once:

• the part of the purchase price the bank does not finance,
• all purchase costs, including taxes, notary and land registry fees, the fee charged by the gestoría — a Spanish administrative office that handles dealings with the authorities and tax filings for you — and advisory fees.

Both amounts rise with the purchase price. That is why you cannot work out your budget with a single division: the additional costs are not a fixed surcharge. Some are calculated as a percentage of the price, while others follow an official fee schedule. The calculator therefore finds the purchase price at which the figures balance exactly, then shows you how the total breaks down.

What the bank will finance

The loan-to-value ratio is the proportion of a property’s value that the bank will lend. It is not set by law; it is a matter of bank policy. Each bank sets its own ratio based on your income, your age and the property. For buyers who are not tax-resident in Spain, the ratio is generally considerably lower than for residents. The only figure you can rely on is the ratio your bank gives you in writing. Enter that in the calculator rather than planning around a rule of thumb. For an overview of how financing works for non-residents, which documents the bank will ask for and how long its assessment takes, read our guide to financing without Spanish residency.

It also matters which value the bank applies its ratio to. It does not use the purchase price, but the lower of the purchase price and the tasación valuation. The tasación is a valuation carried out by an appraisal company licensed in Spain, which the bank requires before approving the loan. If that valuation comes in below the agreed price, the loan falls, the amount you need to provide yourself rises and your budget shrinks. We explain what the valuation costs, who arranges it and why it almost always comes in below the market price in our guide to the Property valuations by Spanish surveyors.

What makes up the additional purchase costs

Tax is the largest additional purchase cost. Which tax you pay depends entirely on whether the property is new or previously owned. The two are mutually exclusive:

• Previously owned property (the seller is a private individual or the property has been occupied before): You pay property transfer tax, or ITP, known in Spanish as Impuesto sobre Transmisiones Patrimoniales. In the Balearic Islands, it is charged in bands, ranging from 8% in the lowest band to 13% in the highest. The rate rises with the purchase price, but each band applies only to the portion of the price that falls within it — the highest rate does not apply to the whole amount.
• New-build property bought from a developer: Instead of ITP, you pay VAT, or IVA (Impuesto sobre el Valor Añadido) to the seller, at a rate of 10%. You also pay stamp duty, or AJD (Actos Jurídicos Documentados), a tax on the notarised deed itself, normally charged at 1.5%. In the Balearic Islands, a higher AJD rate applies when the amount recorded in the deed exceeds €1,000,000.

The upshot is that a new-build property attracts more tax than a previously owned one. With the same amount of cash available, your maximum purchase price is therefore lower if you buy from a developer. We explain how both taxes work, and when a property counts as “new”, in our guide to property transfer tax in the Balearic Islands.

The second category is the cost of the deeds. The Notario, or Spanish notary, formalises the purchase agreement as an escritura pública — a public deed. Without it, the purchase cannot be registered. The Registro de la Propiedad, Spain’s property register, then records you as the owner. Both charge according to the Arancel, an official fee schedule dating from 1989 that sets fixed rates for each value band. These fees rise with the price, but at a decreasing rate: if the purchase price doubles, the notary’s fees do not. Our guide to the process and fees at a Spanish notary appointment explains the other items that may appear on these bills, from copies to powers of attorney.

There is also a baseline of costs that barely varies with the price: the lawyer, the Gestoría and the review of the paperwork. A Gestoría is a Spanish administrative office that files tax returns, follows up on registration and handles dealings with the authorities for you. The Nota Simple, a basic register extract showing a property’s owner, size and any charges against it, is another small but unavoidable expense. For a cheaper property, these baseline costs make up a substantial percentage of the price; for an expensive one, they matter much less. You’ll find every item listed in our full breakdown of additional purchase costs on Mallorca.

Worked examples

The calculator above will give you specific figures once you enter your available cash, loan-to-value ratio and property type. Three patterns are worth watching for.

First, the leverage effect. Increase the loan-to-value ratio by just a few percentage points and the possible purchase price rises more than most people expect. That is because your equity contribution makes up the difference to one hundred per cent, and even a small change to it has a noticeable effect on the calculation. It is almost always worth speaking to a second bank.

Second, the new-build discount. With the same amount of equity, switching from an existing property to a new build reduces your budget significantly, even though the financing has not changed. The higher tax bill uses up equity that would otherwise go towards the purchase price.

Third, the fixed-cost effect. With smaller budgets, fixed costs account for an uncomfortably large share. If your budget is tight, allow a generous contingency: translations, powers of attorney and an additional notarisation can quickly add to the bill.

Important: the calculator gives you an upper limit, not a target. You should have something left for ongoing costs after the purchase, minor repairs and your first tax return.

Special cases

• The tasación is lower than the purchase price. The bank applies its loan-to-value ratio to the lower of the two figures, and you must cover the shortfall with additional equity. The calculator has no separate field for the valuation — you can model this case by reducing the loan-to-value ratio accordingly: a ratio applied to a valuation below the purchase price is always lower when expressed as a proportion of the purchase price. For how the valuation works, see the Spanish bank's property valuation.
• Your capital is in Germany. Equity from a German investment portfolio or property can be used, but it must be available in time and you must be able to document its origin; Spanish banks and notaries require proof. For what to bear in mind, see bringing German capital into a Spanish property purchase.
• High purchase price. Above a certain notarised transaction value, namely €6,010,121.04, the Arancel no longer sets a fixed fee: the notary is free to agree their fee. For properties like these, the calculation is only a guide to the upper end of costs, and you must obtain a quote before the appointment.
• The new-build budget stays flat at a certain point. Above a certain notarised transaction value, a higher rate of AJD stamp duty applies in the Balearic Islands. If your budget falls just below that threshold, you will therefore see the same maximum purchase price across a whole range of additional equity: the next euro of purchase price suddenly requires several thousand euros more in cash. This is not a calculation error but the threshold itself — and a good reason to stay below it in negotiations.
• Buying without financing. If you pay in cash, the loan-to-value ratio no longer applies, but the additional purchase costs still do. Set the loan-to-value ratio to zero, and the calculator will show how much of your funds remains for the purchase price after taxes and fees.
• Buying jointly or through a company. Having more than one buyer does not change how the taxes work, but it does affect the bank’s assessment. Buying through a company is subject to separate rules that this calculator does not cover.

What the calculator does not include: financing costs

The additional costs above relate to the purchase. The mortgage itself has its own costs, and the law has specified who pays them since 2019. Under Article 14(1)(e) of Ley 5/2019 on real estate credit agreements, the lender pays the notary’s fee for the mortgage deed, the cost of registering the mortgage with the Registro de la Propiedad (land registry), and the financing gestoría. The bank also pays the AJD stamp duty on the mortgage deed — but that rule is not in Ley 5/2019. It is in Article 29 of the law on transfer tax and stamp duty, as amended by Real Decreto-ley 17/2018.

The same provision expressly makes you responsible for one cost: the tasación, the valuation the bank uses to assess the property. That is why the calculator has a separate field for it, set to zero by default — there is no official fee schedule for valuations, so your bank or the valuation company will tell you the price. Enter the amount you have been quoted and the budget will include it.

This is not an exhaustive list of financing costs, nor is it meant to appear to be one. If the bank charges an arrangement fee (comisión de apertura), you pay it — Article 14(4) of the same Ley 5/2019 expressly permits the fee, but requires it to be charged only once and to cover all processing costs. You will also generally need buildings insurance, which the lender may require. The calculator includes neither cost; check both in the bank’s offer. For an overview of how Spanish mortgages work for non-residents, see financing without tax residency in Spain.

Deadlines and forms

When buying an existing property, you declare the property transfer tax using Modelo 600, the tax form issued by the Balearic tax authority ATIB, within one month of signing the deed. In practice, the gestoría handles this, often the day after the notary appointment, because the Registro will not register the purchase without proof that the tax has been paid.

For a new-build property, the process is different: you pay the IVA to the developer with the purchase price, rather than to the tax authority, and the developer passes it on. You declare the AJD stamp duty yourself using Modelo 600 from ATIB, also within one month of signing the deed.

So do not tie up the money for the tax in a long-term investment. It becomes payable shortly after the appointment, not weeks later.

Legal basis and current position

Property transfer tax and stamp duty are governed by Spanish law on transfer tax and stamp duty; the Balearic Islands, as an autonomous region, set their own rates and adjust them regularly. IVA is governed by national VAT law. Notary and land registry fees follow the 1989 Arancel and its subsequent amendments.

One assumption underlies every line of the breakdown, and it needs to be made clear: the calculator assigns all the costs of the purchase deed to you. That is not what the law provides. Article 1455 of the Código Civil states that the seller pays the costs of executing the deed, while the buyer pays for the first copy and everything that follows — but expressly subject to salvo pacto en contrario, meaning unless otherwise agreed. On Mallorca, contracts almost invariably stipulate that the buyer pays everything, and that is the basis of this calculation. This reflects standard contract practice, not a legal requirement — and it is something you can negotiate.

The calculator uses the rates currently in force in the Balearic Islands and assumes that you are not tax-resident in Spain and are buying the property as an individual. It is no substitute for tax or legal advice. To calculate the costs for your specific situation with certainty, you will need an offer from your bank and a cost breakdown from your lawyer or gestoría.

Frequently asked questions

Related calculators

• If you already know the purchase price and want to see what you will pay on top, calculate the total additional costs for your specific property.
• To calculate just the tax on a resale property, use the tiered Balearic property transfer tax calculator.
• To estimate the deed costs alone, use the notary and land registry fees calculator.
• To check how much you can realistically borrow, start with mortgages for buyers who are not resident in Spain.