Tax advantages and special regulations make buying property in the Canary Islands attractive. These advantages stem from the Canary Islands' special tax status within the European Union.
Lower indirect taxes
On the Canary Islands, the “Impuesto General Indirecto Canario” (IGIC) is payable when purchasing property, instead of the Spanish Value Added Tax (IVA). While VAT in Spain for the purchase of a new Immobilie in der Regel bei 10% liegt, beträgt die IGIC auf den Kanarischen Inseln nur 7%. Das bedeutet, dass der Kauf einer neuen Immobilie auf den Kanarischen Inseln steuerlich günstiger sein kann als auf dem spanischen Festland.
Property transfer tax
When purchasing a used property in the Canary Islands, as in the rest of Spain, a Property Transfer Tax (Impuesto sobre Transmisiones Patrimoniales, ITP) is levied. The tax rate varies by region, but in the Canary Islands, it is considered to be in a moderate range compared to other Spanish regions. However, there may be differences in the rates depending on the value of the property and the specific island.
Inheritance and Gift Tax
On the Canary Islands, there are also certain advantages when it comes to inheritance and gift tax. The Canary Islands government grants reductions or exemptions in certain cases, particularly when close relatives are involved. This can mean significant tax relief when transferring real estate through inheritance or gift.
Income tax for non-residents
When you rent out the property, the rental income is subject to Non-Resident Income Tax (Impuesto sobre la Renta de No Residentes, IRNR). While the tax rate for non-residents is generally 19% (for EU citizens) or 24% (for non-EU citizens), there are certain tax deductibility options on the Canary Islands that can be utilised depending on the individual circumstances. These options, however, are similar to those on the mainland and are not specific to the Canary Islands.
Exemptions and discounts for first-time buyers
In some cases, first-time buyers establishing their main residence on the Canary Islands may benefit from additional tax reductions. However, these regulations can vary depending on current legislation and regional policy, and should be examined in detail.
In summary, purchasing property in the Canary Islands offers tax advantages, particularly due to the lower IGIC compared to Spanish VAT. Potential reliefs also exist for other taxes such as inheritance and gift tax. Nevertheless, it is important to thoroughly inform yourself before purchasing and to seek professional advice if necessary, in order to best utilise all individual benefits.
