What has genuinely changed this year is not the rates themselves but the income and price thresholds that decide who qualifies for a reduced rate. Following Order 5/2026 and later Law 4/2026, the price ceiling for accessing bonifications in Mallorca and Menorca has been raised to levels above previous limits, while Ibiza and Formentera have a higher ceiling reflecting their steeper property market.
None of these reductions applies to the whole price. They apply only up to a statutory lower threshold, with anything above taxed at the standard scale. The Agència Tributària de les Illes Balears confirms the operative figures, and the Govern de les Illes Balears sets out how the new thresholds apply retroactively from 1 March 2026.
ITP is the tax you pay when buying a second-hand home from a private seller in the Balearic Islands. It replaces VAT for resale properties and is calculated on a progressive scale that only taxes each portion of the price at its own rate, in the same way income tax works. Buyers frequently assume the top rate applies to the whole purchase price. It doesn’t, and understanding the marginal mechanism is the difference between overestimating your costs by tens of thousands of euros and getting your budgeting right from day one.
The 2026 tranches work like this: the first €400,000 of value is taxed at 8%, the slice between €400,000 and €600,000 at 9%, between €600,000 and €1,000,000 at 10%, between €1,000,000 and €2,000,000 at 12%, and anything above €2,000,000 at 13%.
Here’s how that plays out in practice for three common Mallorca price points:
One point worth flagging before you sign anything: ATIB doesn’t always accept the declared purchase price at face value. If the figure written into the contract sits noticeably below the reference or cadastral value, the tax office can open a verification procedure and reassess ITP on the higher figure. Notaries and registrars regularly point to this as the single most common source of post-completion disputes, so it pays to keep evidence of how the price was negotiated, including any independent valuation and the deposit contract, according to guidance from the Colegio de Registradores.
Not every buyer pays the general scale. The Balearic government offers three separate reduction tiers, each with its own conditions, and it’s worth checking whether you fit one before you assume the full rate applies to your purchase.
Here’s the part buyers often get wrong: none of these reductions covers the entire purchase price, no matter how far under the island threshold your property sits. The lower rate only applies to the first €270,151.20 of declared value. Everything above that statutory amount reverts to the general progressive scale. Local tax advisors and guides aimed at foreign buyers stress this repeatedly, because the threshold increase in 2026 is easy to misread as a blanket exemption when it isn’t one.
Pro Tip: Ask your gestoría to run both scenarios, general scale and reduced rate, before you sign the arras contract. The difference on a mid-market Mallorca property can easily run into several thousand euros, and it changes how much cash you need at completion.
The tax treatment of your purchase hinges on one simple question: is the seller a private individual or a developer selling for the first time?
Buy a resale home from a private owner, and ITP applies on the progressive scale already covered above. AJD in the Balearics generally runs around 1.5%, though Mallorca notes a higher 2% rate applies at the top end of the market for higher-value transactions.
Take a €500,000 property as an example. Under ITP, as shown earlier, the tax comes to €41,000. New-build purchases generally carry a heavier tax load, which is worth factoring into any comparison between a resale villa and an off-plan development.
One nuance worth knowing: in certain circumstances, a developer can choose to waive the VAT exemption on specific transactions, which shifts the tax treatment. It’s a technical point, but it’s exactly the kind of detail a good local adviser checks before you commit funds.
ITP isn’t collected automatically at completion. You, or more realistically your gestoría, must self-assess and pay it using Model 600, the standard autoliquidation form recognised across Spain and administered locally through ATIB.
Two pieces of Balearic legislation reshaped the bonification landscape this year, and the timing matters if you completed a purchase earlier in 2026.
The CAIB press release framed the increase as a direct response to rising property values pricing more buyers out of existing bonifications. Anyone unsure which version of the rules applied to their specific completion date should check the primary text through BOIB or confirm directly with ATIB.
Knowing the rates is one thing. Getting the paperwork right so you don’t overpay, or get caught by a late reassessment, is another matter entirely. Before you commit to a Mallorca purchase, work through this sequence.
Pro Tip: Build a protective clause into the arras contract stating that if ATIB later re-characterises the declared value, responsibility for any resulting surcharge is clearly allocated between buyer and seller. It’s a small addition that avoids a large argument later.
Vogue Properties Mallorca’s buyer guide walks international clients through exactly this sequence for every transaction, coordinating with trusted local notaries and gestorías so nothing gets missed between offer and completion.
The 2026 threshold changes have noticeably shifted buyer behaviour. More clients are now asking upfront whether their target price sits inside or outside the bonification band, rather than discovering the answer after signing. That’s a healthy change.
It’s an easy assumption to make and an expensive one to get wrong. If your purchase price sits close to either the island threshold or the statutory reduction cap, it’s worth getting a written estimate from a local adviser before you commit, rather than relying on a rough online calculation.
— Sophie
Working out ITP is only one part of a Mallorca purchase. The bigger challenge for most international buyers is coordinating the whole transaction, from negotiating contract clauses that protect you if ATIB later questions the declared value, to knowing which notary and gestoría to trust with a six-figure sum.
Vogue Properties Mallorca has spent over twenty years guiding international buyers through exactly this process, matching clients with properties suited to their lifestyle and budget while recommending trusted local advisers for the tax and legal side. Whether you’re weighing a resale finca against a new-build villa, or trying to work out which of the two tax regimes applies to a property you’ve fallen for, the agency’s local team can talk you through the practical implications before you make an offer. Browse the current portfolio of properties for sale in Mallorca, or explore the collection of luxury villas if you’re searching for something more distinctive, and get in touch to arrange a tailored conversation about your next step.
Following Law 4/2026, the bonification threshold for Mallorca and Menorca is €331,859.70, while Ibiza and Formentera use a higher ceiling of €378,212.
No.
You must file and pay ITP through Model 600 within one month of signing the purchase deed, or you risk a late-filing surcharge and interest.
Vogue Properties Mallorca coordinates with trusted local gestorías and notaries so buyers understand their likely ITP liability and meet filing deadlines correctly.