The Balearic Islands, with their charm and unique characteristics, offer a unique setting when it comes to the transfer of real estate, whether by inheritance or donation. If you own property in Mallorca, Menorca, Ibiza, or Formentera, or are a resident and expect to receive one, it is crucial to understand how taxation works and what steps to take for efficient planning.
At Resitax, we know that the complexity of these processes can raise many questions. That is why we have prepared this practical guide to help you navigate the Inheritance and Gift Tax (ISD) and other key aspects in the Balearic archipelago.
Why is the Balearic Islands different? The key lies in fiscal autonomy
Spain is a decentralized country, and the autonomous communities have the power to regulate Inheritance and Gift Tax, introducing allowances and reductions on top of the state regulations. This means that the amount payable on an inheritance or real estate donation in the Balearic Islands can be significantly different from what would be paid in, for example, Madrid or Catalonia.
Although the basic regulations are national, the allowances and reductions applied by the Balearic Islands are the most important factor to consider. It is essential to keep up to date with the latest changes that may be approved for 2025, as these can have a substantial impact on the tax bill.
Real estate inheritance in the Balearic Islands: The Inheritance Tax (ISD)
Who pays and when?
When a property is transferred by inheritance in the Balearic Islands, the main tax to be paid is the Inheritance Tax.
- Who pays the tax? The heirs or legatees.
- When is it paid? The general deadline is six months from the date of death, which can be extended for another six months if requested in the proper form and within the specified time frame.
Key aspects of taxation in the Balearic Islands (2025)
Family allowances:
- Group I (descendants and adopted children under 21): 100% allowance on the total tax liability.
- Group II (descendants aged 21 or over, spouses and ascendants): 100% allowance on the total tax liability.
- Group III: 50% allowance (siblings, nephews, uncles, etc.)
- Group IV: 25% allowance (cousins and more distant relatives)
Other applicable reductions
In addition to the allowances, there are reductions on the taxable base depending on the relationship and pre-existing assets.
Reduction for acquisition of habitual residence
If the inherited property was the habitual residence of the deceased and is maintained by certain heirs, an additional regional reduction may apply.
Valuation of the property
The taxable base is the actual value of the property. It is essential to adhere to the official value to avoid checks.
Real estate donations in the Balearic Islands: The Donation Tax (ISD)
Key aspects
- Who pays the tax? The donee.
- When is it paid? One month after the public deed.
- Is a deed required? Yes, always before a notary.
Allowances and deductions
DL 4/2023 maintains the current regional deduction, which allows a maximum tax rate of 7% for direct relatives.
Other taxes to consider
- Municipal capital gains tax (IIVTNU): Paid by the donor, depending on the cadastral value and length of ownership.
- IRPF: The donor must declare the capital gain, if any, on the savings base.
Planning and practical advice
To optimize the tax burden and avoid problems with inheritance and real estate donations in the Balearic Islands, consider the following:
- Plan ahead with expert advice.
- Value the property realistically.
- Keep your documentation up to date.
- Consider the tax residence of the donor or deceased.
- Have an up-to-date will.
- Check for updates to regional regulations every year.
An example of how these issues are regulated in other countries can be found in this OECD report on inheritance taxation.
Conclusion: Professional advice for efficient planning
Managing a real estate inheritance or donation in the Balearic Islands can seem overwhelming due to the complexity of tax and legal regulations. However, with proper planning and expert advice from specialized professionals, you can optimize the process, minimize the tax burden, and ensure that the transfer of your estate or the receipt of real estate is carried out as efficiently as possible.
At Resitax, we are at your disposal to offer you personalized advice on taxation and real estate law in the Balearic Islands.
Do you need help with an inheritance in the Balearic Islands?
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