The Foreign Buyer Tax in the Balearics – Separating Fact from Fiction7th February 2025

The Spanish government recently proposed imposing a new tax aimed at curbing property purchases by non-residents. The idea behind this move is to address concerns that foreign buyers are driving up housing prices, making it harder for local residents to afford homes. While this concept was mentioned in a press briefing, no formal legislation has been introduced or implemented.

Legal experts and industry professionals suggest that the government’s statement may have been misinterpreted or overstated. Rather than a broad tax targeting all foreign buyers, Spain is more likely considering an increase in specific property-related taxes—such as transfer taxes or ownership levies—that would apply to both local and international buyers.

What Could This Mean for the Market?

Since the full details remain unclear, any new tax on foreign property purchases could have significant ripple effects, particularly in areas like Mallorca and Ibiza, which have long been popular with international buyers. Potential consequences include:

1. Reduced foreign investment, which could slow down the real estate market and impact property values.

2.  Economic effects, as regions that rely on property sales to international buyers may see downturns in related industries such as tourism, construction, and local businesses.

3.  Changes in buyer behaviour, with some investors rushing to buy before any new policies take effect, while others take a wait-and-see approach.

Should Buyers Be Concerned?

Our sales director, Maria, points out that “similar discussions about restricting foreign property ownership have arisen before but rarely lead to actual legislation…passing such a law would be complex, requiring significant legal and economic considerations.”

At this point, no concrete policy has been enacted, and we believe speculation shouldn’t discourage interested buyers. In fact, this period of uncertainty could present opportunities—some sellers may be more open to negotiation. Additionally, purchasing now means avoiding any potential future tax increases.

If you’re considering buying in Mallorca or Ibiza, we’re here to help you navigate this evolving landscape with expert guidance and local insight.