Vast tax benefits to the island
Who hasn't dreamed of owning a luxury villa on the sunshine island of Mallorca and spending days lounging by the pool or sending the helicopter down to Palma to pick up a Chinese takeaway? Well I certainly have and I'd probably splash out out on three delicious fried rice rather than just the egg fried rice that poorer people order!
For most of us it's just a pipe dream but the lucky few who can afford super luxurious houses that cost more than a million are helping us all out by contributing vast sums of money to the island's economy. Like many places in the world there is a tax on the purchase of a property which, like many other places, increases as the value of the property rises.
To buy a big house in Mallorca will result in an 10.76% of the value being paid in tax to the Govern of the Balearic Islands! Last year alone over €20 million was received on the sale of just 33 properties, 10 sold for over €6 million and 23 between €4 and €6 million!
Add in the 152 houses which sold for over €2 million and the tax paid by just 185 new owners was €61.8 million. To put that into perspective that is more than was collected from the millions of tourists who visited the Balearics and paid the Sustainable Tourism tax, commonly known as the Ecotax.
So, if you are under budgetary constraints whilst looking for a property, do remember to add on 8% of the value up to €400,000 and 10% above it for property tax. If you you are looking at new properties then there's also 10% VAT to pay as well, and just to rub salt into the wounds, when you sell there's capital gains tax of 19 to 23% to pay too!
Purely at random, I picked out a luxury villa from estate agents Engel and Volkers and used a photo of it by architectural photographer Benjamin Antony Monn. It's the Villa Chameleon in Son Vida near Palma and is on sale at €29.5 million.