With the Eurozone debt crisis continuing to stall economic growth, it is no secret that Spain is one of the worst hit countries in Europe.

In direct response to this, there has been a certain amount of pressure placed upon the country’s autonomous regions to do their bit to address budget issues. The Balearic Islands have taken this on board and adopted an initiative which increases property transfer tax.

The increases, which were announced at the end of March, leave people with just one month to get used to the plan which will see property lumped together in price bands. From May 1, the first €300,000 of a resale property in the Balearics, which includes Mallorca, will be taxed at 7 per cent. If the property falls between €300,000-€500,000, it will be taxed at 8 per cent, between €500,000- €700,000 at 9 per cent and anything in excess of €700,000 at 10 per cent. Up until now, tax has been charged at 7 per cent across the board no matter the price of the property.

There is an exception to the rule – new-build homes are exempt from ITP and are instead subject to IVA, the equivalent of VAT, which remains reduced from 8 per cent to 4 per cent in an attempt to inject life into a stale property market. This reduction in IVA was brought into play in mid-2011 and has just been extended to last until the end of 2012.

For information on stunning new-build properties currently for sale in Mallorca, contact the The Overseas Guides Company team on 0207 898 0549. For details of property for sale all over Spain, visit the Spanish listings on Rightmove Overseas. One way to save money when buying in Spain is to use a currency specialist when transferring your pounds into euros to complete the purchase of your property. For more information on this, contact Smart Currency Exchange.

To understand the full step-by-step process to buying a property in Spain, collect The Overseas Guides Company’s ‘Spain Property Buying Guide’