Taxes

Important Terms about Taxes in Canary Islands By buying or selling a property there are several costs and taxes involved. We always recommend the help of a notary or private agency to help with all the paper work and legal issues. To contribute with some help we have made a list of frequently used terms and their meaning:

I.G.IC. - Impuesto General Indirecto Canario. In the Canary Islands there is a different tax situation than in the rest of Spain. The IVA (Impuesto sobre el Valor Añadido) is substituted by the Canary IGIC (Impuesto General Indirecto Canario) with tax rates of 0%, 5% (general type) and 13%.

ITP - Impuesto sobre Transmisiones Patrimoniales. Apart from the I.G.I.C., the ITP is one of the most important tax contributions in real estate transactions. The ITP is always present after the second sale of a property. The spanish laws establish a general tax rate of 7% applied to the real value of the transaction. Unless otherwise agreed the buyer is responsible for the payment. In any case it should be written in the purchase / sale contract.

IAJD - Impuesto de Actos Jurídicos Documentados. It is always to be payed when notary documents with economical values are registered. The calculation base in mortgages is the mortgage liability and by the purchase of a house (first sale) the price that figures in the title deed. The tax will change depending on the region and the value.

IBI - Impuesto sobre Bienes Inmuebles. The owner of any property must pay every year the IBI. This tax is calculated by the property values (0,4% city and 0,3 % rural). These tax types are basic reference and may be slightly changed by the Town Hall of the town/city of the propery.

Plusvalía This tax is a local tax applied on property value for the capital gain created during the years of ownership. This tax is paid to the Town Hall of the town/city of the house in question.

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