Costs of owning a property in Tenerife

Tax.
Either 6% ITP (Impuesto sobre Transmisiones Patrimoniales, a transfer tax) for resale properties, or 5% IGIC (Impuesto General Indirecto de Canarias, equivalent to Value Added Tax) on new properties. For new properties only, stamp duty at 0.5% will also be payable.


Notary Fee.
This will vary depending on the value of the property, and should be between 500 and 1000 Euros. The minimum charge is around 300 Euros.


Land Registry.
Your new property will need to be registered in the municipal land registry (Registro de la Propiedad), and the fee should be around half of the notary fees, except for garages or parking spaces, where the fees will be around the same as the notary fees.

Source - Cancasa

Seller
Seller's costs will be estate agent's commission, unless selling privately, and capital gains tax of 18% (this figure is changing) on any profit. If the seller is a non-resident, then to avoid them leaving without paying CGT, a 3% retention will be withheld at notary. There will also be a plusvalía bill for any rise in value of the land on which the property is built, not on the increase of value of the property itself. In the past, the purchaser has often paid this, and some agents will still try to get the purchaser to pay it, but by law the seller should pay it.

Ongoing costs of owning a property in the Canaries are as follows:

Water. You normally pay this straight to the Water Board and the amounts are charged according to metered usage. Sometimes, but not often, water costs will be paid through the community who will meter usage internally.

Electricity. Again, paid directly to the Electricity Board and charged according to metered usage.

Rubbish (Basura). This is usually paid directly to the municipal authority and is charged annually or half-yearly depending on municipality. Sometimes it is arranged through a community.

Rates (IBI: Impuesto sobre Bienes Inmuebles). The amount depends on the size, location and age of your property: the calculation is 0.45% of Valor Catastral (rateable value).

Community Charge. This is payable by owners of properties which are part of complexes and the specific amount is determined by an owner's share of the community (quota), which clearly depends upon the size of the property. It is paid into a community fund which is disbursed by the administrator as instructed by decisions made at community AGMs/EGMs. The community will adopt a budget depending upon its various facilities, e.g. lifts, multiple swimming pools, gardens, and that budget will be divided between the owners according to their quota.

Wealth Tax(Impuesto sobre el Patrimonio). This was a tax on all assets owned in Spain by non-residents and all assets owned worldwide by residents. It was usually payable in May/June, calculated as follows:


Property valued at : Tax Rate %

Up to 167,129 : 0.2
167,129 - 334,253 : 0.3
334,253 - 668,500 : 0.5
668,500 - 1,337,000 : 0.9
1,337,000 - 2,673,999 : 1.3
2,673,999 - 5,347,998 : 1.7
5,347,998 - 10,695,996 : 2.1
Over 10,695,996 : 2.5

Any mortgage on the property may be deducted from the value before the tax rate is applied. Residents also have an allowance which is deducted from the value for calculation purposes. The value used as the basis for the calculation is the highest of the value on the Escritura, the Valor Catastral, or the value deemed by the municipal authority if the Escritura value is unaccepted.

Income tax (Impuesto sobre la Renta). Residents and non-residents owning property or investments in Spain are obliged to file annual tax returns. The income tax rate is 25% on investments, including interest obtained from deposit accounts, and rental income.

Non-residents are further required to declare notional rental income even if they do not let out their properties. Notional income is deemed to be 2% of the property value calculated as for wealth tax.


Important
This is to be used as a guide only as figures are constantly changing, there can be no replacement for legal & fiscal advice from your lawyer & accountant in the Canary Islands to protect your interests.


Source -
Cancasa