Tax. Either 6.5% ITP (Impuesto sobre Transmisiones Patrimoniales, a transfer tax) for resale properties, or 7% IGIC (Impuesto General Indirecto de Canarias, equivalent to VAT) on new properties. For new properties only, a document registration tax (AJD – Impuesto sobre Actos Jurídicos Documentados) of 1% will also be payable, making the “tax” on new properties 8% as opposed to 6.5% for a resale.
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 must 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.
Plusvalía. This is a tax on the increase in assessed value of the land on which a property is situated during a vendor’s period of ownership. Its proper name is Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana. It is calculated both on the surface area of the plot as well as the difference in its Valor Catastral (rateable value) between the point of previous sale and your own purchase. Plusvalía is usually in the region of a few hundred Euros, but can rise to several thousand Euros if a large amount of land is involved or the previous owner has held title for many years. Or, rather, this used to be the case. In many municipalities it remains at a few hundred Euros. The amount is often not known much in advance of signing, and sometimes not until afterwards, because it is calculated by the municipal authorities, some of which only produce the figure after completion. By law, the vendor is required to pay this tax, though in the Canaries, it has frequently been negotiated so that the purchaser is responsible. Over recent years, however, with an increasingly tough market and a tightening up of all procedures, vendors are much more likely to agree to pay Plusvalía as they are legally required to do.
Independent Lawyer. We would always advise the buyer to hire an independent lawyer to represent their interests during the buying procedures. There are many issues when properties are bought with some debts or probable future debts, however a reliable lawyer helps to foresee and avoid such issues.
Special thanks to Janet Anscombe for the information on taxes.