Property Sales Tax in The Canary Islands

Property Sales Tax Payable in Spain

All new properties in Spain are subject to IVA (equivalent to

VAT in the UK & Ireland) or IGIC in the Canary Islands

whereas secondhand properties are subject to ITP (Impuesto

de Transmisiones Patrimoniales).

Property Sales Tax Payable in Spain

IVA is set by the State government and ITP is set by the

regional government.

Both IGIC and ITP is set by the Canary Islands regional

government.

Property Sales Tax Payable in Spain

The Spanish government announced on 19/08/2011 that the

IVA rate would be reduced to 4%, down from the standard 8%,

in order to promote the sale of vacant new properties in Spain.

This specially reduced rate is valid until 31/12/2011 when it will

revert to 8%.

Property Sales Tax Payable in Spain

In the Canary Islands IGIC is levied on the sale of new houses.

In response to the central government's reduction of IVA the

regional government in the Canary Islands has decided to

reduce the IGIC tax.

Property Sales Tax Payable in Spain

As soon as the tax reduction is approved by the regional

parliament the rate will be reduced from 5% to 2.75% but

unlike the mainland reduction only where the property has a

maximum value of €150,000 and is the purchaser's first

principal private residence.

Property Taxes Payable in the Canary Islands

Spanish property law in the Canary Islands, specifically Ley

5/2004 as modified by Ley 9/2005 sets out the rate of tax

payable on the transfer of secondhand property and the

creation of rights over the property (except for mortgages) as

being 6.5% of the value of the property.

Where the property being purchased is a property subsidised

by the government then it is subject to a tax rate of 4% if the

property is going to constitute the main home of the

purchaser.

Protected or Social Housing

The purchase of a property is subject to a tax rate of 4% if

the property is going to constitute the main home of the

purchaser if:

- the purchaser is under 35 years of age

First Home Purchase

- the total taxable income of the purchasers does not exceed

€25,000

- it is the first home purchase and the purchaser has never

owned any property before

First Home Purchase

Decreto Legislativo 1/2009 further provides that a property

acquired by a legally defined 'large' family for the purpose of

being their main home is subject to a special tax rate of 4%

where:

- the property is purchased within 2 years of the family

achieving the status of being 'large'

Initiatives for Large Families

- the property formerly used as a family home must be sold

within the same period of time

- the total taxable income of the family unit may not exceed

€30,000 with the limit increasing €12,000 for each child in

excess of the number required for 'large' family qualification

Initiatives for Large Families

Purchase of Housing by the Disabled

The acquisition of a property as a main home by a person

suffering a disability of > 65% or by any person who may avail

of income tax reductions to care for that person, shall attract a

rate of tax of 4%, where:

Purchase of Housing by the Disabled

- the total taxable income of the purchasers does not exceed

€40,000 with an additional €6,000 for each person for whom

the care allowance deduction can be applied

- that any property that previously was the main family home

be sold within two years of the purchase of the new home

If you would be interested in a free and comprehensive

guide that will help you to avoid the typical pitfalls the

foreign buyers of property fall into as well as dealing

with issues such as...

Guide to Dealing with Property in Spain

To find out how to deal with such issues as...

Which legal checks on a property

are vital to avoid any problems

The step-by-step process

of buying a property in Spain

As well as...

Typical ploys to watch out for

to avoid being defrauded.

Property taxes you pay and

those you don't!

And much more...

Download the myAdvocate Spain guide to Dealing with Property in Spain by clicking on:

Secrets to Dealing with Property in Spain

Or for further information on the property purchase process specifically go to:

Real estate lawyer Spain

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