Luxury property, Mallorca.

Luxury property, Mallorca.

18-07-2021E.Q.

The luxury housing market is booming and the Balearic Government has raised more money in the first six months of this year than it did before the pandemic.

Conselleria d’Hisenda data shows balance of 449.7 million euros up to June, compared to 424.2 million in 2019.

With much of the population in lockdown in 2020 and economic activity paralysed, collection fell to 358.2 million euros. 75% of that corresponds to property transfer tax on the purchase and sale of second-hand homes.

The one-million-euro property sector is moving the most at the moment.

The Balearic Government scooped 312.4 million euros in property transfer tax in the first six months of this year, which is the highest figure for more than a decade; almost 100 million euros more than in 2020 and way above the 269 million euros collected in 2019.

Luxury and delays

The Government says the increase in revenue is down to two factors; the increase in the luxury housing market and the fact that some transactions from 2020 were delayed until 2021 because of the pandemic.

Inheritance and donations revenue increased to 74.6 million euros in the first six months of this year, compared to 47.7 million in 2020 and 56.3 million in 2019.

The 56% increase in revenue compared to 2020 is being attributed to the high mortality rate last year, because the children of an estate owner must pay taxes when a relative dies.

The tax with the most negative revenue so far is the ecotax.

Barely 2 million euros was collected compared to 32 million in 2019 and 34 million in 2020, because the Government froze ecotax payments throughout 2020 and only collected tax for campsites and holiday homes.

The 32 million euros collected up to June last year actually corresponds to 2019, when there was tourist activity.

VAT and IRPF collection fell further in the Balearics than in other Communities.

The Government is expected to know this month how much money it owes from the funding system to begin drafting the budgets.

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