Costs of buying a property in the Canary Islands and Spain

When you work out what a home in Spain will really cost, the purchase price is only part of the picture. On top of it come taxes and buying costs, and they vary a lot depending on where you buy. This guide explains what you will pay and why the Canary Islands are one of the most attractive places to buy.

The short answer

Plan on 8–13% of the purchase price for taxes and buying costs, depending on the province. In the Canary Islands you will usually be at the lower end, around 8%. Elsewhere in Spain the figure can be considerably higher.

If you are buying with a mortgage, add that to the around 30% own contribution that banks usually ask non-residents for. In total, roughly 38–43% of the price.

Taxes: resale or new build?

The main tax depends on whether the property is being sold for the first time.

Resale property (second hand). You pay the transfer tax (ITP). Each region sets its own rate, and the Canary Islands have one of the lowest in Spain.

New build (first sale by the developer). Instead of the transfer tax, you pay:

• —VAT on the mainland, or IGIC in the Canary Islands — the islands’ own indirect tax, with a lower rate than mainland VAT.
• —Stamp duty (AJD) on the purchase deed.

The lower IGIC is one of the reasons new builds can be especially good value in the Canaries.

Notary and land registry

The fees of the notary and the land registry are regulated by law and depend on the price and the length of the deeds. For most homes they are a small part of the total: usually well under 1% of the price.

Lawyer

Not compulsory, but strongly recommended, especially if you buy from abroad: a good lawyer checks the property, its legal situation and the contract, and can act for you with a power of attorney. Fees vary by firm; many charge around 1% of the price.

Costs linked to the mortgage

Since the 2019 mortgage law, the bank pays the notary fees for the mortgage deed, the land registry, the administrative agency and the stamp duty on the mortgage. As the buyer you mainly pay:

• —The valuation of the property, required by the bank (usually a few hundred euros).
• —Copies of the deeds that you request.

Other costs to keep in mind

• —NIE and, if needed, a Spanish bank account.
• —Sworn translations of some documents, if they are not in Spanish.
• —Currency exchange, if your money is in another currency: a specialist partner can save you a lot compared with a regular bank transfer.
• —After the purchase: annual property tax (IBI), community fees and home insurance.

Why the Canary Islands?

Lower buying taxes, IGIC instead of VAT for new builds, pleasant weather all year round and a large, established international community. For many of my clients the numbers and the lifestyle point in the same direction.

This guide is for general information: rates change and every purchase is different. Your lawyer will confirm the exact taxes for your property. If you tell me about your plans, I will help you calculate your real personal investment before you start looking.