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One-off taxes and expenses when buying a property in Tenerife




Before you start thinking of looking for a property, you need to be aware of the costs associated with buying a property in Tenerife. There are penalties in place if you do not pay the taxes on time. There are different expenses and fees that are important to consider. Canary Islands have their own specific tax system on the property purchase that tends to be lower than the Mainland Spain. To make it clearer for the buyer, we separate the taxes and one-off costs – when purchasing a new build and when purchasing a second-hand property.

Purchase of a new built property:

1. IGIC (Stamp Duty in the UK)– 7% of the cost of the property

2. Actos Jurídicos Documentados (tax to be paid on registration of legal acts) – notary sealed documents. This tax includes fixed and variable rate. Fixed rate tax will be applied on documents that need to be prepare don a stamped paper. Variable rate is applied on documents where a sum of money or any valuable which needs to be registered in the Property registry, Commercial or Industrial registry. This tax on documented legal acts ranges between 0.75% and 1% of the value specified in the purchase agreement.

3. Notaria (Notary fees) – from 300 to 400 euros.

4. Registro de Propiedad (Property registry) – this fee is payable for registering your property in the general Property registry and for the entry in the Land registry. The fee is 0.75% from the purchase value.

5. Gastos de gestión (legal fees) – typically range from 200 to 500 euros. They include a process of the payment of all above taxes in the institutions. During bank transfer, banker´s draft or cash payment you will also be required to pay the amount of the legal fees (calculated in advance). The exchange of contracts will take around 2 to 3 months. After the exchange of contracts you will receive the original of the purchase agreement and a refund of any overpaid taxes and fees in case the previously calculated amount will be higher than the actual taxes and fees.

6. Plusvalía(tax of the land value growth) – this tax is levied by the municipality and depends on the location, year of the construction and the number of years the previous landlord has owned the property. This taxi s usually paid by the seller, unless agreed otherwise.

7. N.I.E. – foreigner number that needs to be obtained in the police. The fee of 11 euros needs to be paid at the bank.

8. Nota Simple (extract from the registry) – this document is issued by the Property registry and allows you to receive information about owners, property description, encumbrance, area, etc. After the exchange of contracts our company will take care of the preparation and receipt of this document.

Subtotal: up to 8.5% in taxes and fees of buying a property without a mortgage  

Purchase of the pre-owned property:

1. ITP (property transfer tax) – is 6.5% of the purchase value

2. Notaria (notary fees) – from 400 to 600 euros and double in case of the mortgage

3. Registro de Propiedad (Property registry) - this fee is payable for registering your property in the general Property registry and for the entry in the Land registry. The fee is 0.75% from the purchase value.

4. Gastos de gestión - (legal fees) – typically range from 200 to 500 euros. They include a process of the payment of all above taxes in the institutions. During bank transfer, banker´s draft or cash payment you will also be required to pay the amount of the legal fees (calculated in advance). The exchange of contracts will take around 2 to 3 months. After the exchange of contracts you will receive the original of the purchase agreement and a refund of any overpaid taxes and fees in case the previously calculated amount will be higher than the actual taxes and fees.

5. Plusvalía(tax of the land value growth) – this tax is levied by the municipality and depends on the location, year of the construction and the number of years the previous landlord has owned the property. This taxi s usually paid by the seller, unless agreed otherwise.

6. N.I.E. – foreigner number that needs to be obtained in the police. The fee of 11 euros needs to be paid at the bank.

7. Nota Simple (extract from the registry) – this document is issued by the Property registry and allows you to receive information about owners, property description, encumbrance, area, etc. After the exchange of contracts our company will take care of the preparation and receipt of this document.

Subtotal: up to 7.8 % - in taxes and fees of buying a pre-owned property without a mortgage

The costs will be higher if you require a mortgage:

1. Fee for opening a mortgage account – from 0.4 % to 1.5 % from the mortgage value

2. Actos Jurídicos Documentados (tax to be paid on registration of legal acts) – notary sealed documents. This tax includes fixed and variable rate. Fixed rate tax will be applied on documents that need to be prepare don a stamped paper. Variable rate is applied on documents where a sum of money or any valuable which needs to be registered in the Property registry, Commercial or Industrial registry. This tax on documented legal acts ranges between 0.75% and 1% of the value specified in the purchase agreement.

3. Life insurance – the quote will depend on your age, the value of the mortgage and other factors. In case of death of the insured person, the mortgage gets covered by the insurer.

4. Registro de Propiedad (Property registry) – this fee is payable for registering the mortgage in the Property registry. The fee is 0.75% of the mortgage amount.

5. Surveyor´s fee is from 200 to 300 euros and it is carried out by the companies that are authorised by the banks.

Subtotal:

Taxes and fees for a new built property with mortgage – up to 12.5%

Taxes and fees for a pre-owned property with mortgage – up to 11.5% 

 

Additional expenses:

- Bank´s fee for issuing the banker´s draft is from 0.4% from the value

- Home insurance is mandatory and costs from 100 euros per month. Our company can provide any type of insurance (car, home, health etc.)


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