Holiday Rental Yield

What return can a holiday flat in Mallorca deliver?

There's no answer that holds true for everyone — and any figure someone gives you without knowing your property is a guess. The return depends on four variables that differ widely from case to case: the purchase price, the nightly rates your location and standard of fittings can command, the occupancy across the whole year — not just the two peak summer months — and your tax residency. That's why there's a calculator above and not a range.

What can be said in general is the direction of travel: holiday letting achieves higher gross income than long-term letting of the same flat, but it also consumes considerably more of that income and, since Decreto 4/2025, carries a regulatory risk that long-term letting does not. After costs and taxes, the gap between the two models is regularly smaller than it first appears.

There are two things the calculator can't do for you. It doesn't tell you whether your property may be let to holidaymakers at all — that's decided by the ETV licence, the toughest filter in the whole of Mallorca. And it's no substitute for tax advice: it calculates the standard case of letting by a private individual, not a structure through a company.

How it's calculated: from nightly rate to net return

The method is laid out openly, because otherwise you couldn't check whether the result fits your property. It runs in six steps.

Step 1: The seasonal scale becomes occupied nights

A single annual price would be a fiction — the same flat costs a multiple in August of what it costs in February, and in February it usually stands empty. The calculator therefore splits the year into three seasons and asks for two figures for each: the price per night for the whole flat and the occupancy rate. The length of the seasons isn't taken from an input but from the calendar of the chosen tax year; together they cover the year completely.

This distinction matters more than it looks: the low season is exactly the period for which Balearic law reduces the tourist tax. Where peak and mid-season split, by contrast, is purely presentational — if your property already commands peak-season rates in June, you reflect that through the mid-season price, not by shifting the boundary.

From the available days and occupancy come the occupied nights per season, rounded down to whole nights, and from that the gross income. The sum across all three seasons is the gross rental income — the top line of the breakdown.

Step 2: The tourist tax runs alongside, not inside

The Ecotasa — officially the Impuesto sobre estancias turísticas, i.e. tax on tourist stays — is the item where most yield calculations take a wrong turn. Legally, it's a tax on the guest: under Art. 6 of the Ley 2/2016, the guest is the contribuyente, you are only the sustituto, meaning you collect it and pass it on. As long as you charge it in addition to the overnight price, it's a pass-through item for your yield.

If, on the other hand, your price shows it as included, you bear it economically yourself. There's a switch for this, and it acts on two fronts at once: on your cashflow and on the assessment base of the Spanish tax.

The amount follows Art. 13 of the Ley 2/2016. For holiday flats, the rate is €2 per day and person. Two reductions are deducted from this:

• In the low season, the tax is reduced by 75% (Art. 13.2.a).
• If the same stay lasts longer than 8 days, each additional day is reduced by 50% (Art. 13.2.b). Both apply in sequence: in the low season, the already-reduced amount is halved again.

That's why the calculator asks for your average length of stay — it determines how many nights fall into the reduced range. And that's why it doesn't ask for "persons", but for guests aged 16 and over: stays by younger guests are exempt under Art. 5.1.a). A field that counts children overestimates the Ecotasa for every family.

Step 3: Operating costs, separated by their trigger

Holiday letting has a cost structure that long-term letting doesn't know: a large part of the costs arises not per year, but per booking. The calculator therefore distinguishes four types:

• Costs per occupied night — cleaning, linen, consumption. They scale with occupancy; so an additional booking brings in less than its price would suggest.
• Commission — the share of the rental income for the platform or agency.
• Annual letting costs — management, listings, photos: everything that keeps the flat lettable, regardless of the number of bookings.
• Ongoing property costs and maintenance — the property tax IBI (Impuesto sobre Bienes Inmuebles), the building insurance, the community fees of the comunidad de propietarios, meaning the owners' association, plus repairs and maintenance. These costs arise even when no guest comes.

Which running costs actually add up for a holiday property, you can go through position by position in the calculator for the running costs of a holiday property before entering them here.

Step 4: The tax comes from the tax calculator, not from a rule of thumb

This calculator does not calculate the tax line itself. It passes rental income, occupied nights, costs, cadastral values and your residence to the calculator for the tax on holiday letting and adopts its result unchanged. Two calculators that determine the same tax in two different ways will sooner or later arrive at two different figures. Three points from this have a particularly strong effect on the yield:

Your residence determines the cost deduction. If you are tax-resident in the EU or the EEA, you deduct your costs from the rental income and only pay tax on the surplus at the rate of 19% of the non-resident tax IRNR (Impuesto sobre la Renta de no Residentes). From a third country, the full rental income is taxed without any deduction at 24% — the single biggest lever in the whole calculation.

Vacancy days are not tax-free. Spain taxes a property that is available to you even during vacancy — on a flat-rate basis based on the cadastral value (valor catastral, the official value on your IBI notice, not the purchase price). The weaker the occupancy, the greater the share of the year that falls under this flat rate.

Depreciation reduces the tax, not the cash flow. Each year, the building share is depreciated at 3% — land is not. That's why the calculator asks for the cadastral value and the building share separately; both are stated on your property tax notice.

Step 5: The purchase incidental costs move into the denominator

The yield measures a return against a capital employed, and that is larger than the notarised purchase price. The calculator determines the incidental costs itself: tax according to the applicable scale, plus notary (notario), land registry (Registro de la Propiedad), administrative office (gestoría — the office that handles the bureaucratic procedures and formalities for you) and lawyer. Which tax applies depends on the condition of the property: for resales, the property transfer tax ITP (Impuesto sobre Transmisiones Patrimoniales), for new builds, the value added tax IVA (Impuesto sobre el Valor Añadido) plus the stamp duty AJD (Actos Jurídicos Documentados). If you have a concrete offer, you can replace the calculated incidental costs with your own figure.

Step 6: The two yields — and why the interest stays out

At the end there are two percentage figures, and they differ in numerator and denominator. The gross yield puts the rental income in relation to the purchase price — that's the figure from the listing. The net yield deducts operating costs and Spanish tax and calculates against the purchase price including incidental costs. The gap between the two is therefore larger than a pure cost deduction would explain; both lines state their denominator explicitly, so this remains visible.

The point most in need of explanation is the last one: The financing costs are deliberately not included in the yield. The yield measures what the property generates, not how you pay for it. Two identical flats on the same street have the same property yield, even if one is paid in cash and the other largely financed. If interest were included in the numerator, you could mathematically worsen your yield through more debt capital, even though nothing has changed about the property itself.

They are not left out entirely, though: they appear as a separate line under the result, so you can see what remains after debt service, and they enter the tax calculation unchanged, since they are deductible expenses there. This is not double counting, but the tax effect of the same payment.

Worked examples

Below the calculator you'll find several fully calculated cases. They are not typed in manually, but generated by the same calculation that also processes your inputs — you can load any example into the fields and then change the price, occupancy or residency to see which figure actually moves your result.

Special cases that shift the calculation

The ETV licence: without it, you're calculating a model, not reality

Before a yield calculation makes any sense, it must be established whether this property may even be rented out to holiday guests at all. The permit is called ETV (Estancia Turística Vacacional, touristic holiday accommodation) and has been the decisive bottleneck in Mallorca since 2025.

With Decreto 4/2025, the Balearic government has effectively frozen the new allocation of ETV licences for flats in multi-family buildings — the pisos. This fundamentally changes the market: a flat with an existing, transferable licence is a different economic asset from an identical flat in the same building without a licence, and the price difference between the two is not a premium, but the value of a right that can no longer be reproduced.

Anyone letting without a valid licence risks substantial fines; enforcement has noticeably tightened in recent years. Check the licence status before signing at the notary's — the guide on how to get a licence for holiday letting in Mallorca sets out which documents are required. If you specifically want to buy a property with an existing licence and need to know from what surcharge it pays off, the calculator for the profitability of an ETV licence can help.

Co-ownership: each person calculates and declares their own share

If you own the property jointly with your partner, siblings or a community of heirs, in Spain it is not the community that files a declaration, but each person individually, with their own share. If you enter your share in the calculator, it divides income, tax and investment in the same proportion. This is where many calculations go wrong: if you halve the income but leave the purchase price in full in the denominator, you end up with half the actual return.

Residence outside the EU and EEA

The cost deduction is tied to residence in the EU or EEA. From a third country — since Brexit this also applies to the United Kingdom — you pay tax on the rental income gross: no cleaning, no commission, no interest, no depreciation. For a holiday let with its high share of costs, this is often the difference between a viable and a negative calculation. Switch the residence setting in the calculator once and compare.

When the tourist tax is included in the price

The switch is pre-set to "in addition to the price", because that is the statutory default. There are two cases where it affects you anyway, which the calculator deliberately does not apply, because they depend on your contract rather than the law:

• If a platform calculates its commission on the total amount including the Ecotasa, you pay commission on a pass-through item. Check what your commission rate is based on.
• If you don't collect the tax from the guest, you still owe it. The law only gives you the right to charge it.

Stays that cross the season boundary and the announced increase

The calculator assigns each night to its season and does not combine a stay that runs across 30 April or the turn of the year. The discount for long stays therefore falls away at this boundary — the calculation is more cautious than favourable there.

Also worth keeping an eye on: the Balearic government has announced a seasonal increase in the tourist tax for the summer months. Announced is not the same as in force. The calculator works with the rate of the currently applicable legal text; if the law changes, the new value will be added as a further version of the same register entry and will not alter any calculation already made for the past.

The market you're buying into

The starting position is ambivalent: prices are rising, supply remains scarce, and at the same time the regulatory screw is being tightened further. The independent CRES Market Study 2026 (Center for Real Estate Studies at the Steinbeis Transfer Institute, in cooperation with Porta Mallorquina) shows an island-wide average price per square metre of 7,370 euros for 2026 — an increase of 9.8 percent on the previous year; since 2015, prices have thus roughly doubled in arithmetic terms. At the same time, residential property transactions in the Balearics fell by 13.9 percent in November 2025 compared with the same month the previous year, according to the Spanish notaries' association — high price levels and regulatory pressure are thus slowing deals without pushing prices down.

For your yield calculation, this mainly means one thing: the denominator is high and keeps rising, while the achievable rental income doesn't grow at the same pace. A flat that yielded a decent running return ten years ago won't automatically do the same at today's entry price. You can find out how prices have developed by location in the overview of property prices in Mallorca.

Purchase-related costs: capital that earns no rent

Alongside the purchase price, a noticeable block of additional costs arises on acquisition: ITP for resale properties or IVA and AJD for new-builds, plus notary, land registry, gestoría and lawyer. This capital earns no rent — it sits in the denominator of your net yield and drags it down every year, and it can't be recovered on resale.

The calculator above determines this block itself and shows it as a separate line. For your specific property, the calculator for purchase-related costs in Mallorca breaks it down item by item; how the Balearic property transfer tax is tiered by purchase price is explained in the guide on how property transfer tax is calculated in the Balearics.

The alternative: long-term rental

long-term rental (arrendamiento de vivienda) falls under the national tenancy law LAU (Ley de Arrendamientos Urbanos). Tenants there enjoy protection against termination for several years — typically five years with private landlords, longer with legal entities. For you, this means: predictable income, no seasonality, little operational effort, but hardly any flexibility and no option for personal use. Demand is high because tourism pressure, population growth and sluggish new construction have put pressure on the housing market, especially in Palma and its surroundings.

The same basic tax rules apply as for holiday letting: cost deductions if resident in the EU or EEA, no deduction if resident in a third country, depreciation on the building portion. What differs are the types of costs — no cleaning per booking, no platform commission, hardly any vacancy, but a tenancy-law risk instead of a seasonal one. The details are set out in the guide on how a long-term rental on Mallorca pays off.

Holiday letting or long-term rental: the comparison

The two models differ in almost every respect. The comparison deliberately doesn't state yield ranges — you calculate those above for your property.

The short version: the higher gross returns of holiday letting melt away after costs, taxes and realistic occupancy to a level that is often closer to long-term letting than the gross figures suggest — with considerably more effort and risk. Anyone who wants to use the property themselves anyway often opts for holiday letting regardless, because it's the only form that allows both.

Personal use: every week you stay costs you income

The calculator above assumes you don't use the property yourself — the clean basis for a yield statement, but rarely the reality. Every week you spend there yourself is a week without rental income, and it almost always falls in the period when the flat would earn the most. Its cost, therefore, is not the average price but the peak-season price, minus the cleaning and consumption costs saved.

How many weeks of personal use your calculation can withstand before it tips over is shown by the calculator below.

A second effect comes into play for tax purposes: days of personal use not only reduce income, they also shift the cost deduction. Spain only allows costs to be deducted proportionally for the days let — anyone who uses the property themselves for half the year can only claim half the annual costs.

Which locations offer the better ratio between price and return

Purchase price and achievable rental income are not equally well balanced everywhere. The southwest achieves the highest holiday rents on the island — but also the highest entry prices, and licensed stock is scarce there. Palma has the strongest long-term rental demand; for holiday letting the city is largely closed off due to the licence freeze.

According to the market study, supply is growing fastest in the northeast and southeast — for buyers, that means more choice and a stronger negotiating position. For holiday letting, there's also a factor there that no price table captures: the length of the season. A location that still performs in May and October brings in more over the year than one that only works in August — try this out above by changing the shoulder-season occupancy rather than the peak-season price.

Appreciation: a bonus, not a baseline assumption

The ongoing rental yield is only part of the story; historically, appreciation has been the bigger component for Mallorca property. Still, going forward: past appreciation is no guarantee. CRES expects further, but more moderate, growth for 2026. Anyone who bases their purchase decision mainly on expected capital gains is taking on a market risk that has nothing to do with rental income — in a market with high transaction costs, where an exit can take months.

That's why the calculator doesn't include an appreciation assumption. It answers the question "What does this property yield on an ongoing basis?", not "What will it be worth in ten years?". An investment that only works out with capital gains doesn't work out without them.

Financing and return on equity

Debt can be used to leverage the return on equity — but only as long as the interest rate is below the property yield. That's exactly why it's worth knowing the property yield cleanly and without financing before you even think about financing: it's the threshold that determines whether the leverage works in your favour or not.

Non-resident buyers in Spain typically receive a lower loan-to-value ratio from Spanish banks than residents, and the purchase-related costs are practically never included in the financing. This means the equity requirement is higher than the loan-to-value ratio alone would suggest. What Spanish banks require from foreign buyers is covered in the guide on how to finance a property in Mallorca.

The most common mistakes in yield calculations

Most miscalculations don't come from arithmetic errors, but from forgotten items:

1. Confusing gross with net. Listings quote gross yields. After management, cleaning, commission, maintenance, vacancy, IBI, community fees and tax, a noticeably smaller share remains.
2. Only clarifying the licence status after the purchase. Since Decreto 4/2025 the most expensive of all possible mistakes: a flat without an ETV licence cannot be retroactively turned into a holiday let.
3. Leaving the purchase incidental costs out of the denominator. They are capital deployed just like the purchase price, only without a return.
4. Extrapolating occupancy from the high season. The summer weeks are the easy part; the annual yield is decided in April, May, October and November.
5. Only thinking about income tax. Alongside the tax on rental income and vacancy, non-residents above the tax-free allowances are subject to the annual Wealth Tax on their Spanish assets. It is based on the property value, not on the return — and therefore applies even in a weak year.
6. Blanking out the risk of empty months. A holiday property stands unattended for weeks outside the season. How you protect yourself against unauthorised occupation is as much part of the calculation as insurance.
7. Overlooking the vacancy taxation. Anyone who only budgets for the tax on rental income calculates too optimistically — the weaker the occupancy, the more so.
8. Ignoring renovation costs. Holiday letting wears down a flat faster than permanent use. An overview of processes and permits can be found in the section on building and renovating on Mallorca.
9. Not checking the Land Registry. Charges, debts or unclear ownership become your problem after the purchase — how to read the extract is explained in the guide on how to check the Spanish Land Registry.
10. Considering the purchase structure too late. Whether the purchase is made privately or through a company can only be changed afterwards with considerable effort; the trade-off is set out in the guide on when buying through a Spanish SL is worthwhile.

What comes up after the purchase

• Choosing management. Professional holiday-home management costs a significant share of the rental income, but reduces vacancy and effort. Work through both variants above.
• Obtaining the energy certificate. Mandatory when letting — how to get one is explained in the guide on the energy certificate in Spain.
• Plan for maintenance. Air conditioning, pool and garden are not optional for holiday lets — they're part of the offering.
• Think about the exit. Which taxes apply on resale is covered in the guide on taxes on property sales in Spain.
• Sort out inheritance matters. The rules on this are set out in the guide on inheritance and gifts in the Balearics.

Checklist before deciding to buy

• Land registry extract (nota simple) requested and checked for charges, debts and easements
• ETV licence status clarified: available, transferable or not possible — in writing, not verbally
• Purchase incidental costs calculated for your specific property, not estimated
• Yield calculation prepared as a net calculation, including tax, management, maintenance and vacancy
• Occupancy assumed separately for all three seasons, not derived from peak summer
• Tax residency and its implications for cost deductions checked
• In case of co-ownership: shares and the separate filing obligation clarified
• Financing structure and actual equity capital requirement, including incidental costs, determined
• Purchase structure — private individual or company — discussed with an asesor fiscal, i.e. a Spanish tax adviser
• Energy performance certificate reviewed
• Renovation needs assessed and factored into the purchase price or buffer
• Community fees of the comunidad de propietarios and IBI for recent years requested
• Quotes obtained for holiday home management and their commission basis checked
• Independent lawyer (abogado) — not the seller's

Deadlines and forms

Anyone letting to holiday guests has two ongoing reporting obligations, which are dealt with separately.

The tourist tax you declare yourself — as sustituto of the guest, in your own self-assessment with the Balearic tax authority ATIB. It does not follow the rhythm of income taxation but has its own deadlines; for holiday accommodation, the declaration is tied to the end of the season. Keep records of guests, nights and ages on an ongoing basis — they form the basis of the declaration and are hardly reconstructable afterwards.

Income taxation on the rental income runs for non-residents via the Modelo 210, the declaration form of the Spanish tax authority AEAT for the non-resident tax IRNR. There isn't just one declaration per year, but several: one for the rental income and one for the flat-rate taxation of the days on which the property was available to you. Which deadlines apply and how the split works in cases of co-ownership is explained in the calculator for holiday rental tax.

If you don't want to do both yourself, this is usually handled in Spain by a gestoría. Their fee then belongs among the rental costs for the year, not in the tax line.

Legal basis and status

The tourist tax is based on the Ley 2/2016 de 30 de marzo, del impuesto sobre estancias turísticas en las Illes Balears. Relevant are Art. 13.1 for the rate for holiday accommodation, Art. 13.2.a) for the low-season reduction, Art. 13.2.b) for the reduction for long stays, and Art. 13.3 for the definition of the low season; the exemption for younger guests is set out in Art. 5.1.a), and the division of roles between guest and landlord in Art. 6 and Art. 10. The applicable version of the rate rules stems from the Ley 13/2017 and has applied since 1 January 2018.

Taxation of rental income follows the IRNR law for non-residents or the IRPF for those resident in Spain; the licensing requirement and the moratorium on new licences follow Balearic tourism law as amended by the Decreto 4/2025.

Below the result, the calculator states the status of each value used, together with its source. Two limits are explicitly noted: you can choose an earlier tax year, while the line on the legal status names the current status — and a Balearic law first appears in the official Balearic gazette before making its way into the consolidated versions. When deciding on a six-figure sum, it's worth having an asesor fiscal check the current status.

Official sources

• Ley 2/2016 (Balearic tourist tax), consolidated version: boe.es
• ATIB — Agència Tributària de les Illes Balears (tourist tax, ITP): atib.es
• AEAT — Agencia Estatal de Administración Tributaria (IRNR, IRPF, Modelo 210): agenciatributaria.es
• Consell de Mallorca — tourism and ETV licences: conselldemallorca.net
• Govern de les Illes Balears — Decreto 4/2025 and official gazette BOIB: caib.es
• CRES — Center for Real Estate Studies, Steinbeis-Transfer-Institut: Mallorca 2026 market study in cooperation with Porta Mallorquina — porta-mallorquina.de
• Consejo General del Notariado — Balearic transaction statistics: notariado.org

Conclusion

Holiday letting on Mallorca is not a passive investment but a small business with a property as its fixed asset. The gross yield is higher than with any other type of use, but it is offset by costs that recur with every booking, and by a licence that is no longer newly available for flats.

What still sets the island apart from pure yield markets is the combination of personal use, quality of life, international demand and a structurally limited supply. Anyone who buys a property with a secured licence in a location with a long season, finances it soberly and sets it up professionally can achieve a viable return even at a high entry price. The best decision begins with a complete calculation — and with an honest answer to the question that no calculator can answer: would you still be happy to buy this property even if it doesn't rent out for a whole year? For a broader overview, see our guide on what to consider when letting a property on Mallorca.

Frequently asked questions about the yield of a holiday let

Related calculators

• Calculate tax on holiday letting — the same tax calculation that feeds into the yield above, but in detail: cost deductions, depreciation, vacancy taxation, reporting obligations.
• Compare personal use versus letting — what each week spent there yourself costs in terms of income, and at what point the calculation tips.
• Determine the ongoing costs of a holiday property — the items you enter above as ongoing property costs, broken down individually.
• Calculate purchase incidental costs on Mallorca — the block that sits in the denominator of your net yield, for your specific property.