The purchase price is only part of the total cost of buying a property. Around that price, additional expenses accumulate that can represent between 12% and 15% of the property’s value. Knowing them in advance is essential for planning your budget realistically and avoiding unpleasant surprises in the weeks before signing.
This article breaks down all the costs associated with buying a new-build property in Mallorca. From mandatory taxes to professional fees, including expenses many buyers do not think about until the moment comes to pay them.
VAT: the main tax on new-build property
Buying a new-build property in Spain is subject to Value Added Tax at 10% of the sale price. This is the most significant fiscal cost of the entire transaction and applies exclusively to the first transfer of the property — that is, when you buy directly from the developer.
For a property priced at €300,000, VAT amounts to an additional €30,000. For one at €500,000, it is €50,000. This is an amount that must be factored into your financial planning from the very beginning, because it is paid in full at the time of the public deed.
It is worth clarifying that VAT only applies to new-build property. If you buy a resale property, the applicable tax is the Transfer Tax, with rates that vary by autonomous community. In the Balearic Islands, this tax can reach 11.5% for the highest brackets. This fiscal difference is one more factor to consider when comparing new-build and resale property.
Stamp Duty
Alongside VAT, new-build purchases are subject to Stamp Duty (Actos Jurídicos Documentados), which taxes the formalisation of the notarial document. In the Balearic Islands, the general rate stands at 1.5% of the deeded price, although reduced rates exist for certain cases such as primary residences for young buyers or large families.
For a €300,000 property, this tax amounts to €4,500. It is settled after the public deed is signed and your administrator or lawyer will handle the filing with the Balearic tax authority. The deadline for payment is 30 working days from signing.
If you finance the purchase with a mortgage, the Stamp Duty on the mortgage deed is borne by the lending institution since the 2018 legislative reform. This change represented a significant saving for buyers who previously had to assume this cost as well.
Notary fees
Notary fees are regulated by a fixed tariff and are non-negotiable. They depend on the property price and the number of pages in the deed. For a new-build purchase in the €200,000 to €500,000 range, notary fees typically fall between €600 and €1,200.
The notary charges for the purchase deed. If you also take out a mortgage, the fees for that second deed are borne by the lender. The notary will provide a detailed invoice with the breakdown of fees in accordance with the official tariff.
It is advisable to request an advance estimate from the notary before signing so you know the exact amount you will need to pay. This avoids surprises and lets you have the funds ready in advance.
Land Registry fees
Registering the deed at the Land Registry also carries a cost regulated by tariff. For the same price range, registration fees range between €400 and €800. This expense is essential because registration is what grants full legal protection of your property right against third parties.
The registration period varies depending on the Registry’s workload but is usually completed within two weeks to two months. Your lawyer or administrator will handle submitting the deed and collecting the registered copy once the process is complete.
Key figure for your budget: Adding VAT, Stamp Duty, notary and registry fees together, the fiscal and administrative costs of buying a new-build property in Mallorca come to approximately 12% to 13% of the purchase price. For a €350,000 property, that means an additional €42,000 to €45,500 you need to have available.
Professional fees
Your property lawyer’s fees typically range between 1% and 1.5% of the purchase price, though some professionals work on fixed-fee arrangements. This cost covers contract review, registry and planning checks, full document management and support throughout the process up to Land Registry registration.
If you need tax advice — particularly relevant for non-resident buyers — the tax adviser’s fees are an additional expense that varies according to the complexity of your situation. For a basic tax plan associated with the purchase, budget between €500 and €1,500.
The administrator handling tax payments and document filing at the Registry charges between €300 and €600 for their services. In many cases your lawyer includes these services in their fees or coordinates with a trusted administrator.
Mortgage costs
If you finance the purchase with a mortgage, there are specific costs associated with the loan. The official property valuation, mandatory for mortgage approval, costs between €300 and €600 and is paid by the buyer. The remaining formalisation costs of the mortgage are borne by the lender by law.
The arrangement fee, if applicable, is negotiated directly with the bank. Many institutions have eliminated it or reduced it significantly as a commercial incentive. Insurance linked to the mortgage, such as the mandatory home insurance and the life insurance many banks require, are recurring costs to include in your long-term financial planning.
For non-resident buyers, some institutions apply different conditions that may include higher fees or greater equity requirements. Comparing offers from several lenders is essential to secure the best terms.
Post-purchase costs
After the deed, there are additional costs worth keeping in mind. Utility connections for water, electricity and gas carry costs that vary by provider and contracted capacity, but together can add up to between €200 and €500. Internet and phone set-up is a smaller but necessary cost from day one.
The owners’ community entails a monthly fee covering maintenance of communal areas, pool, gardens, building insurance and, where applicable, concierge services. In quality developments in the east of Mallorca, this fee typically ranges from €100 to €300 per month depending on the services included.
The annual property tax (IBI) is a municipal levy on property ownership. Its amount depends on the cadastral value and the local tax rate. For new builds, the cadastral value tends to be adjusted upward, which can mean a higher IBI than for older properties in the same area. Budget between €500 and €2,000 per year depending on the municipality and the property value.
Frequently asked questions about new-build purchase costs
How much extra money do I need on top of the property price?
As a general rule, allow an additional 12% to 15% on top of the purchase price to cover all expenses. For a €350,000 property, this means having between €42,000 and €52,500 available for taxes, notary, registry and professional fees.
Can I include purchase costs in the mortgage?
Most lenders finance up to 80% of the property’s appraised value, not the purchase price plus costs. This means the associated expenses must be covered with your own funds. Some lenders offer financing above 80%, but with more demanding conditions and higher interest rates.
Are there any costs I can negotiate or reduce?
Taxes and notary and registry tariffs are regulated and non-negotiable. Lawyer and tax adviser fees can be negotiated. The mortgage arrangement fee is also negotiable. Always compare several options before committing to a professional or a lender.
Are costs different for non-resident buyers?
Taxes and tariffs are identical. The main difference lies in professional fees, which may be somewhat higher due to the added fiscal complexity, and in mortgage conditions, which tend to be less favourable for non-residents in terms of loan-to-value ratio and interest rate.