The three islands of the Balearics, found in the clear blue waters of the Mediterranean Sea, are one of the most popular holiday destinations in the world. Each island has its own personality, attracting different visitors and offering a varied property market and lifestyle.
Whether it’s a party weekend, family holiday, holiday home or a more permanent base, these beautiful islands have it all.
Mallorca (pop. 900,000)
The largest of the islands and the most developed, offering regular flights from the UK all year round. The main city is Palma, which is only 10 minutes from the airport. Palma offers excellent shopping, restaurants and nightlife. The north coast has grown in popularity with a number of new marinas being built in recent years. For a more ‘authentic’ Spanish experience, the east coast offers more undeveloped towns such as Arta.
Over 40% of the island is protected national parks, and the Tramuntana mountain range is now a popular cycling and hiking destination.
Generally with lower prices than the other islands, Menorca is also less developed, offering a quieter lifestyle. The capital Mahon is the busiest part of the island and has a well preserved Moorish town centre and a beautiful harbour where you can watch the local fisherman land their catch of the day.
Ibiza (pop. 150,000)
Surprisingly, even though Ibiza has a reputation for its nightlife, large parts of the island are quiet and calm. Property prices are some of the highest in the islands, and luxury is the norm.
Purchase costs
Buyers should allow 13% of the purchase price to cover the costs of buying a property, and potentially another 2% if buying with a mortgage. Taxes will vary depending on the price.
-
The transfer tax (ITP) (similar to Stamp Duty in the UK) based on the purchase price is:
-
Up to 400,000 euros – 8%
-
400,000 to 600,000 euros – 9%
-
600,000 to 1,000,000 euros – 10%
-
1,000,000+ euros – 11%
-
-
This is only paid on existing properties, if you buy a new build from a developer then no ITP is paid, instead VAT (IVA) is included within the price. VAT is currently 10%.
-
Lawyers’ fees 1-1.5% plus VAT
-
Notary fees approximately €1,000
Mortgages
Mortgages are currently available of up to 70% loan to value, so buyers would need to pay a 30% deposit plus the purchase costs. Interest rates are historically low, circa 2% to 2.5% fixed for up to 30 years.
Taxes
In addition to the property purchase taxes, owning property in Spain will bring you into the Spanish tax system, so you should also be aware of the wealth tax, capital gains tax and Spanish inheritance tax. Taxation is influenced by where you are resident and whether the property is a main home, holiday home or investment property.
Fortunately, with careful tax planning, you can largely mitigate these taxes.
If you’re looking for a healthy Mediterranean lifestyle with warm climate, beautiful beaches with crystal clear waters, then the Balearic Islands have it all.
