Buying property in the Canary Islands: the additional costs on buying a property there are usually lower. This article will give you an overview of the different costs if you are considering buying a second home in the Canary Islands.
You buy new construction
In principle, you pay VAT on a new build property. However, there is no VAT in the Canary Islands. However, there is a similar tax: the IGIC. However, the rates are much lower compared to mainland Spain. For example, the purchase of new-build homes is taxed at 7% IGIC. In the rest of Spain, it is 10% VAT.
In addition, there is a stamp duty of 1% on the purchase price. This rate is also low compared to the other autonomous regions of Spain. So, from a tax perspective, buying new construction in the Canary Islands is very cheap.
Here are 5 tips on buying on plan in Spain.
You are buying an existing property (resale)
If you buy an existing property, you do not pay VAT. As in the rest of Spain, there is then the ITP or registration fee. In the Canary Islands, the rate is 6.5% on the purchase price. So again, the Canary Islands are cheap. On the Costa Blanca, for example, the rate is 10% and in Murcia 8%.
Notary's fees
Regardless of new construction or resale, you will also have to pay notary fees. Notary fees are similar to the rest of Spain and depend on the purchase price. Expect around 800 to 1,200 euros.
Honouring your counsel
As the notary's duties are limited in Spain, the assistance of an independent counsel is required. The Spanish notary - unlike his Belgian counterpart - does not check the legal situation of a property. Thus, any debts and unpaid bills, the ownership situation and the urban planning situation are not examined. To have this checked, you need a lawyer or jurist. Count around 1% on the purchase price for this.
Read more about the Spanish notary.
Land registry registration costs
To safeguard your property rights, you need to register your new titles in the land register. In principle, the notary does not do this for you. This cost also depends on the purchase price, but is usually around 400 euros.
Cost of a mortgage
If you take out a mortgage in the Canary Islands, you will owe 1% stamp duty on the amount borrowed + risk. In addition, there are other fees.
Here you will find more explanations on the cost of a mortgage in Spain.
Other costs
Finally, there are some administrative costs such as switching utilities. These costs vary from company to company.
Decision
Buying property in the Canary Islands is cheap compared to other Spanish regions. This is thanks to very low taxes. Typically, total additional costs are around 10% on the purchase price.
Read more about additional costs at the Costa Blanca and Andalusia.
