Capital Gains Tax Spain: What Mallorca Property Owners Pay When They Sell

Capital gains tax Spain is one of the most significant financial considerations for anyone selling a Mallorca property. It applies to both residents and non-residents, covers the profit made on the sale, and operates under rules that are more nuanced — and in some respects more favourable — than many property owners realise when they first encounter the system. Understanding the rates, the deductions available to you, the 3% withholding that applies to non-resident sellers, and the separate Plusvalia Municipal tax that the town hall collects on top of everything else, is essential preparation before any sale proceeds. This guide covers all of it.

What Capital Gains Tax in Spain Is — and What It Is Not

Capital gains tax Spain on property is not a separate, standalone tax. For Spanish tax residents, capital gains from a property sale are declared within the annual IRPF income tax return (Modelo 100) as renta del ahorro — savings income. For non-residents, the equivalent obligation falls under the IRNR (Impuesto sobre la Renta de No Residentes) and is filed via Modelo 210. In both cases, the tax applies to the net gain — that is, the difference between the sale price and the acquisition cost, adjusted for allowable deductions — not to the full sale price.

This is separate from, and additional to, the Plusvalia Municipal — a local tax levied by the town hall on the notional increase in land value. Both taxes apply to the sale of urban property in Mallorca, and both are the responsibility of the seller unless the sales contract explicitly states otherwise.

Capital Gains Tax Rates for Non-Residents

For non-residents selling property in Spain, the capital gains tax rate is a flat 19% on the net gain. This rate applies to all non-residents regardless of whether they are EU citizens, non-EU citizens, or — importantly — British nationals, whose post-Brexit status as non-EU residents does not change the CGT rate applied to property sale gains. The 19% flat rate for capital gains on asset transfers is consistent across non-resident categories; it is the general IRNR income rate of 24% that differs by residency, not the rate applied to capital gains from property sales.

This is a point that is frequently misunderstood. British owners who have read that non-EU IRNR rates are 24% may assume this applies to their sale gain. For the capital gain itself, 19% is the correct rate for property transfer gains by non-residents.

Capital Gains Tax Rates for Spanish Tax Residents

For those who are Spanish tax residents — broadly, those spending more than 183 days per year in Spain — the capital gains tax on property sale profits is calculated on a progressive savings income scale. The 2026 rates are:

These are marginal rates — each rate applies only to the portion of the gain falling within that bracket, not to the total gain. The calculation uses the same savings income scale across all of Spain; autonomous community rates do not affect savings income, so the Balearic Islands' regional variations do not alter the CGT position.

Calculating the Taxable Gain: What Can Be Deducted

The taxable gain is calculated as: Net Sale Price minus Acquisition Cost. The detail lies in what counts toward each figure.

Net Sale Price is the stated sale price at notary, reduced by directly attributable selling costs — the estate agency commission, legal fees incurred on the sale side, and any documented preparation costs. The Plusvalia Municipal paid at sale can also be deducted from the gain.

Acquisition Cost is the original purchase price plus the documented costs paid at the time of purchase — notary fees, land registry fees, property transfer tax (ITP) or VAT if paid on a new build, stamp duty, and legal fees. Documented improvements and renovations that have increased the value of the property can also be added, provided they are supported by official invoices and receipts. Routine maintenance and repair costs are not deductible.

The difference — net sale price minus acquisition cost — is the taxable gain. Getting this calculation right is where significant money is either saved or lost. Many sellers understate their acquisition cost by forgetting to include all purchase costs paid at completion; a gestor or tax lawyer with the original escritura and receipts can typically reconstruct the full figure correctly.

A Worked Example

The difference between a correctly documented acquisition cost and an under-documented one in this example is significant. A seller who forgot to include purchase costs and improvements might show a taxable gain of 300,000 euros rather than 200,000 euros, with a tax difference of 19,000 euros.

The 3% Withholding Rule

For non-resident sellers, the capital gains tax Spain system includes a mandatory withholding mechanism that applies at the moment of sale. The buyer is legally required to withhold 3% of the agreed sale price and pay this directly to the Agencia Tributaria using Modelo 211, within one month of the completion date. This is not a tax in its own right — it is an advance payment against the seller's final CGT liability.

The seller then has four months from the sale date to file Modelo 210, calculate the actual tax due on the net gain, and either settle any outstanding balance or claim a refund if the 3% retention exceeds the actual liability. Refund processing by the Agencia Tributaria typically takes six to twelve months.

In practical terms: on a 700,000 euro sale, the buyer retains 21,000 euros and pays it to the tax authority. The seller's actual liability is 38,000 euros (as in the example above), so an additional payment of 17,000 euros is due when filing Modelo 210. If the actual gain were smaller — say the seller makes only a 50,000 euro gain — the CGT would be 9,500 euros against the 21,000 withheld, giving a 11,500 euro refund to claim.

The Plusvalia Municipal: The Town Hall's Separate Tax

In addition to the national capital gains tax Spain IRNR/IRPF, the sale of urban property in Mallorca triggers the Plusvalia Municipal — the Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana. This is a local tax levied by the relevant town hall (Palma, Calvia, Andratx, or whichever municipality the property sits in) on the notional increase in the value of the land over the period of ownership. It applies to both residents and non-residents.

Since a 2021 Constitutional Court ruling, sellers can now choose between two calculation methods: the objective method (based on cadastral value multiplied by coefficients) or the real gain method (based on the actual proportional increase in land value). Sellers should calculate both and choose whichever produces the lower liability — in many cases the real gain method is more favourable for Mallorca properties that have appreciated significantly.

One key point: if the property has not increased in value since purchase, the Plusvalia Municipal does not apply. Following a 2022 ruling, sellers can challenge the tax where no real gain in land value has occurred, although this requires documentation of the original and current cadastral values and professional assistance to pursue effectively.

Key Exemptions for Spanish Tax Residents

Several exemptions from capital gains tax Spain are available to tax residents that do not apply to non-residents:

Main Residence Reinvestment Relief — if a Spanish tax resident sells their habitual residence and reinvests the full proceeds into purchasing a new habitual residence within two years (before or after the sale), the gain is exempt from CGT. The property must have been the genuine principal residence for a minimum qualifying period. Partial reinvestment qualifies for proportional relief. This exemption is not available to non-residents.

Over-65 Exemption — Spanish tax residents aged 65 or over who sell their habitual residence are fully exempt from CGT with no reinvestment requirement. Again, this does not apply to non-residents.

Life Annuity Relief — residents over 65 who reinvest up to 240,000 euros of gains from any asset sale into a qualifying life annuity within six months are exempt on that portion of the gain. Not available to non-residents.

Double Taxation Treaties

Spain has double taxation treaties with most European countries — including the UK, Germany, the Netherlands, Sweden, Norway and France — as well as the United States and many other countries. Under these treaties, the CGT paid in Spain is typically recognised as a credit in the owner's home country, reducing or eliminating double taxation on the same gain. The specific treatment varies by country, and the interaction between Spanish CGT and home-country tax rules is a matter for a specialist in cross-border taxation rather than a straightforward calculation.

Filing and Deadlines

Non-residents must file Modelo 210 within four months of the notary date on which the property transferred. Filing late — or failing to file at all — forfeits the right to claim any refund of the 3% withholding and attracts interest charges and potential penalties. The form is submitted through the Agencia Tributaria online portal, and in practice the vast majority of non-resident sellers use a Spanish gestor or tax lawyer to manage the filing.

Spanish tax residents include the capital gain in their annual IRPF return, filed in the April to June window following the year of sale.

The capital gains tax Spain position on a Mallorca property sale is manageable and, with correct documentation of purchase costs and improvements, often lower than sellers initially expect. The key is professional preparation: a gestor who has the full escritura history and receipts, knows which deductions apply, and files within the deadlines will produce a significantly better outcome than attempting to navigate the system without assistance.