Taxes and costs of a Canary Islands property: buying, owning, letting, selling

Which taxes do you pay when you buy?

There's only one question that matters: is the property a resale or a new build? That decides which tax applies. The percentages below come from the official sources at the bottom of the page, read on the date shown.

• On the purchase of a resale property you pay ITP (Impuesto sobre Transmisiones Patrimoniales), which in the Canaries has a general rate of 6.5% on the price.
• If the resale property becomes your habitual residence and you meet the requirements of the Canarian Texto Refundido, ITP drops to 5%.
• For certain situations under Canarian law (for example large or single-parent families, within income limits), ITP on a habitual residence is 1%.

• On the purchase of a new-build property from the developer you don't pay ITP but IGIC (the Canary Islands' indirect tax), with a general rate of 7%.
• IGIC drops to 5% if the new-build property will be your habitual residence, the price (including garage and other annexes) doesn't exceed €150,000 — rising to €225,000 for larger families in the general category and €300,000 in the special category — and you don't already own another home.
• A 3% IGIC rate applies to the habitual residence of certain categories (including a household income of up to €24,000), within the same price caps.
• On the notarial deed for a new-build property (subject to IGIC) you also pay AJD, Actos Jurídicos Documentados, at 1%.
• For other notarial deeds on property not subject to IGIC, AJD is 0.75%.

ITP, IGIC and AJD are paid to the Agencia Tributaria Canaria after the deed, before the purchase is registered at the Registro de la Propiedad: without the receipt, the registrador won't register it. Buyers who work with us have a gestoría that prepares the forms and the payments; the law sets the deadlines and we follow them together.

If the seller isn't a Spanish tax resident, the buyer withholds 3% of the price and pays it to the Spanish tax office using form 211, as an advance on the seller's tax.

How much do the notary, registry and gestoría cost?

The notary and the Registro de la Propiedad apply fees fixed by law (the aranceles), which rise with the price of the property and the complexity of the deed: a mortgage, for example, is a second escritura with its own costs. The gestoría, which prepares the taxes and the registration, charges a fee it sets itself. None of these has a single percentage that can be written here without misleading you: that's why we ask for a written quote before the arras are signed, and put it in the total alongside the taxes.

Agency commission in the Canaries is normally paid by the seller, under the signed mandate. Buying with us costs you nothing for our assistance.

A worked example, to give you a sense of scale

Take a resale property worth €200,000, bought as a second home by a non-resident buyer. ITP at the general rate of 6.5% comes to €13,000. On top of that come the notary, registry and gestoría, which depend on the deed and the quote. If the same property were new, in place of ITP you'd have IGIC at 7%, i.e. €14,000, and AJD at 1% on the deed, i.e. €2,000. These are arithmetic sums on the general rates, not a simulation of your own case: the reductions for a habitual residence and personal requirements change the result.

What do you pay every year for owning the property?

• IBI (Impuesto sobre Bienes Inmuebles), the municipal property tax, owed by whoever holds title on the first day of January. Each council sets its own rate within the limits of national law: for urban properties, from 0.4% to 1.10% of the cadastral value. The current year's receipt is one of the documents we ask the seller for, and the law requires the notary to warn the buyer of any outstanding IBI, because the property itself is liable for it.
• The rubbish tax (basura), also set by the council, and in some municipalities other local charges tied to the property.
• Community fees (comunidad de propietarios) if the property is in a building or complex: pool, gardens, lift, caretaker, insurance, plus the compulsory reserve fund. The amounts are set by the owners' meeting; before making an offer we ask for the latest accounts and the certificate of debts, because by law the buyer is liable, through the property, for unpaid fees from the current year and the three years before it (Ley de Propiedad Horizontal, art. 9.1.e).
• Water, electricity, any bottled gas and connection charges: water has its own cost in the Canaries, often higher than elsewhere, and homes without central heating use little in winter.

There's also a tax that surprises many buyers: a property that's at your disposal, not let out and not your main home, produces a deemed income taxed every year.

• 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.
• If the council has revised cadastral values with a collective assessment that took effect in the current tax year or in the ten before it, the deemed income drops to 1.1% of the cadastral value.
• 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.
• For non-residents living outside the EU and the European Economic Area, the general IRNR rate is 24%.

For a non-resident this means filing form 210 with the Agencia Tributaria every year, even if the property doesn't earn a euro. A tax resident declares the same deemed income within their IRPF return. There's also a wealth tax, with a tax-free threshold and rules that vary by region: if your assets in Spain are significant, it's a subject to raise with an adviser before buying.

What do you pay if you let it?

Rent from a residential let is taxable income in Spain, where the property is, for residents and non-residents alike. What changes is the tax and how it's calculated.

• Non-resident in an EU country: IRNR at 19% (24% outside the EU). The law allows EU residents to deduct expenses directly linked to the letting, as IRPF allows residents to do, provided they're documented; it's declared using form 210 for the periods the property is let, and the deemed income for the periods it's vacant.
• 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).

Holiday letting (vivienda vacacional) is a different world: it needs authorisation, the building's own rules can forbid it, and the income has its own tax treatment. We cover this in the guide to investing in the Canary Islands.

What do you pay when you sell?

• The plusvalía municipal (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana): the local tax on the increase in the urban land's value between the purchase and the sale. It's paid by the seller (art. 106.1); it's not due if you can show the value hasn't risen (art. 104.5); it's filed with the council within thirty working days of the sale (art. 110.2). If the seller is a non-resident individual, the law makes the buyer liable for the tax instead (art. 106.2): that's why an amount is withheld at the deed. We work this out with the council before setting the price.
• The rate of the plusvalía municipal is set by each council and can't exceed 30% of the taxable base; the base is calculated using the objective method (the land's cadastral value multiplied by a coefficient linked to the years of ownership) or, if lower, on the actual gain shown by the purchase and sale deeds.
• The tax on the capital gain for a tax-resident seller: it falls within the savings base of IRPF, from 19% on the first €6,000 up to 30% above €300,000, in bands. If the property sold was your habitual residence and the proceeds are reinvested in another habitual residence, the law excludes the gain from tax, in full or in proportion to what's reinvested.
• The gain a non-resident makes on selling the property is taxed under IRNR at 19%, and the withholding the buyer pays via form 211 is deducted from this tax.
• The agency's commission, agreed in the mandate; the energy certificate and any documents that need updating.

For a non-resident seller, the arithmetic works like this: the buyer withholds 3% and pays it using form 211; the seller then files form 210 with the actual gain at 19%; if the withholding is more than the tax due, the difference is claimed back. With the paperwork in order (the purchase escritura, invoices for costs, receipts for the taxes paid at the time) the calculation is straightforward and the refund arrives.

This page is general guidance, not tax or legal advice. Rates change with national and Canarian budget laws: check the sources listed at the bottom, with the date we read them, and for your own situation consult a qualified professional.

How I work on costs, before the offer

I'm Luca, I've lived in the Canaries since 2014 and I look after the property side of Toda Canarias. Before a client makes an offer, I line up every figure on this page applied to that specific property: the latest IBI and basura receipts, the community's latest accounts with the monthly fee, the notary, registry and gestoría quote, the purchase tax at the right rate for their situation. A total in writing, before the deposit: that way nobody discovers a cost at the deed.

I'm not a tax adviser for the annual taxes or for a sale: I put you in touch with professionals who work with foreign buyers and who file form 210 every year for our non-resident clients.