Investing in the Canary Islands: buying a property for income

An honest word on yields

You won't find a yield percentage here: there's no true figure for ‘the Canary Islands’, and anyone who writes one is making it up. A property's return depends on the area, the type of letting allowed, the community fees, your own tax situation and the price you pay. What we can do is set out the rules and the costs, and work through the numbers of one specific property with you, documents in hand.

The four routes for investors

1. The long-term residential let A property let as a home to someone living on the island. It's the simplest to manage and the one with the most stable rules: Spanish tenancy law protects the tenant with minimum terms and limits on increases, and demand for homes to live in on the main islands is strong all year round. Look at areas of residents, not tourists.
2. The holiday let The vivienda vacacional: short lets to tourists. It earns more on paper and costs more in reality: management, cleaning, platforms, seasonality, and above all the licence, which in the Canaries is far from automatic and which the building's own rules can forbid. More on this below and in the dedicated guide to licences.
3. The business for sale A bar, a restaurant, a shop already up and running: you take over the business, not the walls. It's an investment in a job, not in a property, and should be judged as such: the unit's lease, the licences, the real accounts. Our guide to businesses for sale walks through the traspaso step by step.
4. The finca and the land Agricultural land with or without a house. It's appealing and has the strictest rules: rustic land limits what you can build and use, and water carries its own rights. Not an investment to make without a technical adviser and without having read the guide to fincas.

Holiday letting: what has to be true before you buy

• The property has to be capable of being licensed as a vivienda vacacional. Under the Canarian Ley 6/2025, in force since 13 December 2025, using a property for tourism is allowed only if the municipality's planning rules expressly permit it (art. 3.3); the property must be at least ten years old, or five on La Palma, La Gomera and El Hierro (art. 5.1); a declaración responsable is filed with the Cabildo, which registers the activity in the Registro General Turístico (art. 7.1); the registration number must appear in every listing (art. 8.6); the licence lasts five years, ten on the three greener islands (art. 10.1). Anyone licensed under the 2015 rules has five years to carry on. Check with the relevant Cabildo and council before the offer, not with the listing.
• The community of owners mustn't have forbidden it: the Ley de Propiedad Horizontal (art. 17.12) lets the owners' meeting approve, limit, set conditions on or ban holiday letting, by a vote of three-fifths of the owners representing three-fifths of the shares, and impose a higher share of costs on that unit up to a cap; these agreements don't apply retroactively. We read the bylaws and the minutes of the latest meetings.
• The property must meet the required technical and safety standards, and the licence must be displayed and stated in every listing.
• Letting to tourists without a licence, or publishing a listing without a registration number, has since 2025 been a very serious offence under Canarian tourism law (Ley 7/1995, art. 75), with fines from €30,001 to €300,000 (art. 79.2): ‘everyone does it’ isn't a defence.

The rule I use in practice: if a seller or a listing claims a ‘tourist licence’ without showing the document and the registration number, for me the licence doesn't exist until I've seen it.

Which taxes does an investor pay?

On the purchase you pay the same taxes as anyone else buying (ITP on a resale, IGIC and AJD on a new build), at the general rates: the reductions for a habitual residence don't apply to a property bought for income. Our guide to taxes and costs has every figure; here what matters is the income tax.

• If you're not a Spanish tax resident but you live in an EU country, you pay IRNR (the non-resident income tax) at 19% on income from the Spanish property.
• EU residents can deduct expenses directly linked to the letting from the rent, provided they're documented, as the law allows residents to do: community fees, IBI, insurance, repairs, depreciation. It's declared using form 210.
• A tax resident who lets a property as someone's home declares the net income under IRPF with a reduction that, in the general case, is 50% (higher in specific cases set out by law).
• A property that's at the owner's disposal (neither let nor a main home) produces a deemed annual income equal to 2% of the cadastral value, on which non-residents pay IRNR and residents pay IRPF.

On sale, the gain is taxed at 19% for a non-resident EU seller (with 3% withheld by the buyer), and in bands from 19% to 30% for a resident seller, plus the plusvalía municipal set by the council.

This tax information is general guidance, not advice. Holiday letting has its own tax rules (services, indirect tax) that we don't cover here: for your own situation, consult a qualified professional.

The checks we run before an offer for investment

• The nota simple: owner, mortgages, charges. Without it, nothing gets signed.
• The community's bylaws and minutes: tourist use allowed or forbidden, works approved, ongoing disputes, fees and debts.
• The latest IBI bill and the community's latest accounts: these are the fixed costs that remain even with the property empty.
• The energy certificate and the state of the systems: a property meant to be let gets repaired first, not later.
• For holiday letting: written confirmation of the authorisation, or of the possibility of obtaining it, for that municipality and area.
• The price checked against real sales in the same area, not against listings: we show you this with documents, not with an estimate.

How I work with investors

I'm Luca, I've lived in the Canaries since 2014, I've run a business here since 2017 with Toda Canarias, and I look after the property side. With investors I'm more cautious than with people buying to live here: I've seen too many ‘bargains’ that were unlicensed properties in buildings that had banned it. My job is to say first what can't be done, and then to find the property that lets you do what you actually want.

I've read every listing on the site myself; the ones from partner agencies on the islands are rechecked on price every night. If you're looking for something that isn't there today, tell me: I note it and let you know when it arrives.