Property tax and transaction cost overview

Transaction costs are often underestimated by international buyers. Beyond the price, a Canary Islands property transaction typically involves indirect taxes, notary and registry fees, and ongoing local and national taxes.

On acquisition

• New-build first transfers are generally subject to the Canary Islands General Indirect Tax (IGIC) rather than mainland VAT, together with stamp duty (AJD) on the deed.
• Resales are generally subject to transfer tax (ITP) instead.
• Notary, Land Registry and administrative costs.
• Legal, technical and valuation fees, and bank costs where financing is used.

Tax rules, rates and reliefs change frequently and depend on personal circumstances. Every figure or treatment mentioned here must be verified with a qualified tax adviser against the rules in force on the date of the transaction.

While holding

• Municipal property tax (IBI).
• Non-resident income tax obligations on property owned by non-residents, including on rental income or, in some cases, deemed income.
• Possible wealth-related taxes depending on circumstances.
• Community fees and local charges.

On sale

• Tax on capital gains, with withholding mechanisms that can apply when the seller is non-resident.
• Municipal tax on the increase in urban land value (plusvalía municipal).

Planning ahead

Because the tax consequences of acquisition, holding and exit are interlinked, they should be considered together and in coordination with the investor's home-country position before the structure and price are agreed.