Selling your Mallorca home before year end: the 3% withholding, the municipal tax and the refund

What the buyer holds back

When a non-resident sells a property in Spain, the buyer must withhold 3% of the agreed price and pay it to the tax office, whether or not the buyer lives in Spain. The law treats it as a payment on account of the seller's tax, and it is paid on Tax Form 211 within one month of the transfer. On a sale at 1,000,000 euros, the buyer pays you 970,000 and the tax office 30,000.

The 3% is not the tax. It is a deposit against it, and it can turn out to be too much or too little. Keep the proof of payment of Form 211, because you will need its details for your own return. A buyer who does not pay it leaves the property answerable to the tax office, up to the lower of the withholding and the tax due, which is why buyers' lawyers insist on it.

What you really owe: 19% of the gain

The tax is 19% of the gain, for every non-resident seller, whatever the country of residence. The gain is the difference between two figures. The sale value is the price actually agreed, less the costs and taxes tied to the sale. The acquisition value is the price you actually paid, plus the costs of buying: notary, registry and agency fees and the transfer tax. Repairs and maintenance are not added, and the indexation coefficients that used to reduce old gains were abolished for sales from 1 January 2015. A transitional reduction can still apply to a property bought before 1995, and only to the part of the gain generated before 20 January 2006.

Two sellers of the same house at 1,000,000 euros show why the 3% can go either way. Take selling costs of 30,000 euros in both cases. Owner A bought for 600,000 euros and paid 60,000 in costs and taxes: the gain is 1,000,000 less 30,000 less 660,000, which is 310,000 euros, the tax is 58,900, and after the 30,000 already withheld there are 28,900 euros left to pay. Owner B bought for 900,000 euros and also paid 60,000 in costs and taxes: the gain is 10,000 euros, the tax is 1,900, and 28,100 of the 30,000 comes back.

The figures are an illustration. The real gain depends on the documents, which is why we calculate it before the deed is signed.

The return, and how long the refund takes

The seller files Tax Form 210 for the gain in a window of three months that opens one month after the transfer. A deed signed in the middle of December gives a window from mid-January to mid-April. The return has to be filed even when the gain is nil or the result is a refund. Because it is filed in 2027, it uses the new version of the form that applies from 1 January 2027.

If the tax is more than the 3%, you pay the difference with the return. If the 3% was more than the tax, the excess is refunded to you, and the return is where you ask for it. The law does not promise a date. The general rule of the Ley General Tributaria is that once six months pass without payment of a refund having been ordered, for a reason attributable to the tax office, it owes late-payment interest without being asked. In practice you should plan for the money to wait for months, and not count on it for your next purchase.

The municipal tax on the land value

The town hall charges its own tax on the increase in value of the urban land under the property, known as the plusvalía municipal. On a sale the seller is the taxpayer, but when the seller is an individual who lives outside Spain the buyer is the substitute taxpayer and must pay it. That is why the deed usually holds back part of the price, and why you should agree before signing who bears it. The return to the town hall is due within 30 working days of the deed.

It is not due where the land has not gained value between the purchase and the sale, but that has to be shown: the transfer is declared with the purchase and sale deeds, and the value of the land is taken as the share that its cadastral value represents in the total cadastral value of the property. Where there has been a gain, the tax is calculated with coefficients that each municipality sets within a legal maximum, and you can ask to be taxed on the real increase if it is lower.

One date to watch. Real Decreto-ley 29/2026 of 6 October, published on 7 October, sets new maximum coefficients for this tax from 1 December 2026. A decree-law has to be validated by Congress within thirty days of its publication, and an earlier decree-law with similar content was repealed in the first days of October, so the final outcome is not settled. What you actually pay depends on your town hall's ordinance, which can sit below the maximum. Ask for a calculation before choosing the date of the deed instead of assuming that December is better or worse.

Year end: where the money sits on 31 December

Wealth tax is charged on what you own in Spain on 31 December. A house sold before then is no longer in the base, but the proceeds are, if they are still in a Spanish bank account. A sale in the first days of January has the opposite effect, because the house is still in the base for 2026. Where the proceeds go is a decision to take before the year ends, with the wealth tax in mind, and not after.

Before you sign the deed

• Find the purchase deed and the receipts for the costs of buying. They set the acquisition value, and a missing receipt means a gain taxed too high.
• Ask for a calculation of the gain before the deed, so that you know whether the 3% will be too much or too little.
• Agree in the deed who pays the plusvalía municipal and how much of the price is held back for it.
• Ask the buyer's lawyer to confirm that Tax Form 211 is filed within one month, and keep the proof.
• Decide where the money will be on 31 December.
• Check how your home country treats the same gain. Spanish tax paid is usually credited there, but the rules differ from country to country.

We calculate the gain, file the return and claim the refund as part of our buying and selling service. The annual return is explained on Tax Form 210, and the 31 December rule on our wealth tax page.

Sources: Article 25 of the consolidated Non-Resident Income Tax Act (Real Decreto Legislativo 5/2004), rate and withholding by the buyer; Orden EHA/3316/2010 of 17 December (Tax Forms 210 and 211); guidance of the Agencia Tributaria on the sale of property by non-residents and on the buyer's withholding; articles 104, 106, 107 and 110 of the consolidated Local Finance Act (Real Decreto Legislativo 2/2004); article 31 of the Ley General Tributaria; Real Decreto-ley 29/2026 of 6 October, article 10; Ley 19/1991 on wealth tax.

This page is general information and reflects the rules in force on the date shown. It is not advice and does not replace an assessment of your own case.