Gifting Your Mallorca Home to Your Children: Balearic Donation Tax Is Now Zero

Balearic donation tax on gifts from parents to children, and between spouses, now costs nothing. Since July 2025 these family gifts carry a 100 percent tax credit. The donor's capital gains position and the municipal plusvalía still need checking.

For owners in Santa Ponsa and across southwest Mallorca who are thinking about the next chapter, this has changed the conversation. Passing a home to the next generation during your lifetime used to carry a significant tax bill in the Balearics. Today, for close family, the main gift tax has effectively disappeared. Here is what that means in practice, and the parts that still cost money.

What Changed in the Balearics

Spain's inheritance and gift tax, the Impuesto sobre Sucesiones y Donaciones, is set by each region. The Balearic government first removed inheritance tax between parents and children, grandparents and grandchildren, and spouses from 18 July 2023, and then extended the same treatment to gifts. Since July 2025, lifetime gifts to children and spouses carry a 100 percent credit on the tax due, while siblings, uncles, aunts and nephews receive a 60 percent credit (35 percent for relatives by marriage).

In practical terms, a parent who gives a villa, an apartment or cash to an adult child pays no Balearic gift tax. The regional government estimated that the earlier 100 percent credit on gifts of a first home to children saved beneficiaries an average of 7,919 euros each, so the wider rule is a meaningful step.

The Paperwork Still Has to Be Done

A zero bill does not mean no filing. The gift of a property must be formalised in a public deed before a notary, and the recipient still submits the gift tax return to the Balearic tax agency, the ATIB, applying the credit there. The value declared matters: the property must be declared at its real value, and a declared value below that figure puts the credit at risk. A professional valuation before the deed is a sensible first step.

Children who live outside Spain are not shut out. Spanish law allows recipients resident elsewhere in the EU and beyond to apply the rules of the region where the property sits, so a home in Calvià follows the Balearic rules even if your son or daughter lives in London or Munich.

The Donor's Side: Capital Gains

This is the part many families miss. Spanish tax law treats a gift as a disposal by the person giving it. If the house is worth more today than when you bought it, the donor has a capital gain on paper, even though no money changes hands.

There is good news for older owners. Spain's tax authority has confirmed in several binding rulings, most recently V1261-25, that the over-65 exemption also applies when the donor gives away their main home. A Spanish tax resident aged 65 or over who has lived in the house for at least three years pays no income tax on that gain, exactly as if they had sold it. We explain the exemption in detail in our article on the over-65 exemption.

A second home or a rental apartment does not qualify, so a gift of that kind of property does create a taxable gain for the donor. The same applies to owners who are not Spanish tax residents, because the over-65 exemption only exists in the income tax for residents.

The Municipal Plusvalía

The town hall's plusvalía, a local tax on the increase in land value, is charged on gifts as well as sales. With a gift, it is the recipient, not the donor, who pays it. In Calvià, the bill depends on the land's cadastral value and the years of ownership, and it applies regardless of the family relationship. Our guide to the plusvalía tax sets out how it is calculated.

Keeping the Right to Live There

Many parents want to pass on the house but keep living in it. The usual way is to give the bare ownership (nuda propiedad) and keep a lifetime right of use, the usufructo. Your children become the owners on paper, and full ownership passes to them automatically when the usufruct ends, without a second transfer. Our article on usufruct in Spain explains how this works and how each part is valued.

Gift Now or Leave It in a Will?

With both inheritance and gift tax at zero for close family in the Balearics, the choice is less about the regional tax and more about everything around it. A gift during your lifetime lets you see your children settled and avoids the inheritance paperwork later. An inheritance, on the other hand, does not trigger a capital gain for the person who has died, which matters for second homes or for owners under 65.

Family circumstances weigh as heavily as tax. A gift is generally irreversible, so it pays to think through what happens if a child's marriage ends or if you need the capital later in life. A will remains essential either way, and our article on whether you need a Spanish will covers the basics.

Practical Steps

Start with a clear valuation of the property, because every tax in the chain depends on it. Confirm the donor's tax residence, age and how long they have lived in the house. Decide whether you are giving full ownership or bare ownership, and agree how running costs and the IBI will be shared. Then take advice from an independent Spanish tax adviser and a notary before signing anything; the official guidance is published by the ATIB.

If you would like a free valuation of your home as part of that planning, use our valuation form, or call us on +34 971 692 434, message us on WhatsApp or email help@imperial-properties.com. We have worked with families in southwest Mallorca since 1985, and we are happy to talk through the options in confidence. You can also browse our properties across Mallorca.