The Balearics and Catalonia stand out as the autonomous communities in Spain with the highest tax rates on the purchase of luxury residences, both applying a 13% tax on the property value. This fiscal pressure does not appear to deter affluent buyers from across Europe and beyond, who remain interested in investing in these areas.
The 13% tax rate on luxury real estate means purchasers of homes valued over €2 million pay an additional €260,000 in regional taxes. While the Balearics previously held the record for highest taxation on luxury properties, Catalonia has recently increased its rates, with properties above €1 million now taxed at 13%. In contrast, in the Balearics, mansions valued between €1 million and €2 million are taxed at 12%, rising to 13% beyond that threshold.
Between €1 million and €2 million, buying property in Catalonia is even more expensive tax-wise than in the Balearics. The Comunitat Valenciana and Extremadura also charge elevated taxes at 11% for certain transactions, although most autonomous communities maintain an 8% tax regardless of property value.
Marga Prohens' government inherited these high fiscal brackets from predecessor Francina Armengol and has kept them unchanged through several reforms over nearly three years in office. Consequently, luxury property sales continue to generate revenue for Antoni Costa's department, helping to offset declining income from exemptions on Wealth Tax and inheritance tax reductions.
Although the 13% tax level boosts public income, it does not currently discourage luxury property acquisition. The Property Registrars College recently published data for the last quarter, confirming that foreigners remain the primary buyers of luxury homes in the Balearics.
Figures show the islands lead Spain as the preferred location for foreign property buyers, who accounted for 31.47% of all purchases in the last quarter of the year. This share significantly exceeds that of the Comunitat Valenciana, which ranked second at 27.17%. Within this region, foreign buyers represented over 40% of new listings sold in Alicante province during the same period.
Looking ahead, the government plans new fiscal measures but does not intend to alter luxury property tax rates. Instead, proposals include raising the price limit to €380,000 under which buyers under 30 years old are exempt from transfer taxes. Currently, the Balearics are the only community that waives such taxes for purchasers under 30, a policy likely aimed at supporting younger residents entering the property market.