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Taxes in Tenerife

Posted by MCM Real Estate on 18.10.2018

Tenerife is part of the Canary Islands, a territory of Spain. The Canaries have their own government and a special tax status within the European Union. Accordingly, your investments are protected by European law, but you pay less taxes

For foreign citizens there are no restrictions on the purchase of real estate in Spain, Tenerife, Canary Islands. The process of buying or selling is not complicated.

Let’s find out what taxes exist in Tenerife

The cost of purchasing property in Tenerife is approximately 10% of the value of the object and approximately 12% when obtaining a mortgage loan.

Types of main taxes associated with the purchase and maintenance of real estate.

  • Alien Identification Number – NIE
    (Numero de Identidad de Extranjero)

Every foreigner, before starting the process of buying a property, land, vehicle, yacht or business, is required to draw up this document. It is also required to open a local bank account.

Alien Identification Number, issued by the National Police in accordance with Spanish law. His number, which will be assigned to you, is unique and will never change, even if you change your last name. In the future, for you, this document will be no less important than your passport and will be valid until you receive a residence (Residence Permit), if you decide to get one.

Applying for a NIE in Tenerife is not difficult, its cost is about 10 euros, you can get it yourself or by proxy.

  • IGIC – (Impuesto General Indirecto Canario)

This is a value added tax (similar to VAT)
For residential real estate is 7% of the purchase price of commercial real estate and land.

  • ITP – (Impuesto Sobre Transmisiones Patrimoniales)

Property transfer tax.
6.5% of the purchase price, resale property
8% of the purchase price of a primary, new home.

  • AJD – (Actos Juridicos Documentados)

Tax on registration of legal acts.
It is 1% of the property value. Paid if you buy a primary residence.

  • IIVTNU (Plusvalia) – (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana)

Tax on the increase in the value of urban land. Local council tax paid by the property seller.
The tax rate is determined by the mayor’s office of your city (Ayuntamiento).

— Registro de la Propiedad Espana
Expenses for registration in the State Register of Property of Spain.
The amount depends on the price of the object, on average 600 – 1000 euros.

Notary expenses amount to approximately 700-1000 euros.

  • IBI – (Impuesto sobre Bienes Inmuebles)

Annual property tax. The tax rate is 0.5-2% of the cadastral value of the object, but the tax amount also depends on the area and type of housing.
IVTM – (Impuesto sobre Vehiculos de Traccion Mecanica)
Vehicle tax, paid once a year, averages 150-250 euros.

IRNR – (Impuesto sobre la Renta de no residentes, declaracion ordinaria)

Tax on income of non-residents of Spain from the rental of real estate.

Paid annually by homeowners, even if you don’t rent or make a profit.

The rate is 25% of the profit. In another case, the tax form 210 is filled out, for this procedure it is better to entrust a specialist (Acessoria) to calculate this tax.

Successful investment!

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