Are you considering buying property in the Canary Islands (Tenerife, Gran Canaria, Lanzarote, Fuerteventura)? Count on an average of 10% in additional costs on top of the purchase price. This rate is considerably lower than in mainland Spain, mainly thanks to the archipelago's favourable fiscal climate.
This article provides a detailed analysis of all cost items for new construction and existing properties in 2024/2025/2026.
New construction taxes: IGIC instead of VAT
If you buy a new build property in the Canary Islands, you will pay no Spanish VAT (IVA), but the local IGIC (Impuesto General Indirecto Canario). The rate shall be 7% on the purchase price. This is a significant tax advantage over mainland Spain, where the standard VAT rate is 10%.
In addition to the IGIC, you are also the Stamp Duty (AJD - Actos Jurídicos Documentados) due.
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IGIC: 7%
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Stamp duty (AJD): 1%
Here are 5 tips on buying on plan in Spain.
Expert Insight: "The total tax burden on new construction in the Canary Islands comes to 8%. Compare this with the Valencia region (Costa Blanca) where you pay 10% VAT and 1.5% stamp duty. So on a €300,000 purchase, you save €10,500 in taxes directly on the islands."
Taxes at Existing Homes (Resale)
When buying an existing home (resale), you pay Transfer tax (ITP - Impuesto sobre Transmisiones Patrimoniales). In the Canary Islands, this rate is set at 6,5%.
This rate is one of the lowest in all of Spain, making the region attractive to investors and second-home owners. By comparison:
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Canary Islands: 6.5% ITP
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Murcia: 8% ITP
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Costa Blanca (Valencia): 10% ITP
Legal fees and Notary
Besides taxes, you should take into account fees for legal services and the notary.
Lawyer's fees (Crucial)
In Spain, the notary has a more limited duty of investigation than in Belgium or the Netherlands. Count on about 1% of the purchase price for a specialised lawyer.
Spanish notary verifies not standard whether there are debts on the property, whether building violations have been committed and whether the ownership structure is correct. An independent counsel performs this 'Due Diligence'. Without this check, you risk buying property with hidden defects or debts.
Notary fees
The notary is responsible for executing the official deed of sale (Escritura). Rates are set by law and depend on the purchase price.
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Estimated cost: Between €1,200 and €2,000.
Read more about the limited role of the Spanish notary.
Entry in the Property Register
After signing at the notary, your title must be registered in the Spanish property register (Registro de la Propiedad). This protects your title from third parties.
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Estimated cost: Circa €600 to €1,200, depending on the value of the property.
Costs with a Mortgage
Are you taking out a mortgage for the purchase? Keep in mind that bank fees can vary. However, since the new mortgage law, buyer fees have decreased.
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Valuation fees (Tasación): For buyer's account (approx. €300 - €500).
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Opening costs: Depends on the bank.
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Mortgage tax (AJD): Since 2018, this tax on the mortgage deed is usually by the bank paid, not by the consumer. Note: This differs from the AJD on purchase of new construction, which is at your expense.
Here you will find more explanations on the cost of a mortgage in Spain.
Summary Overview: Canary Islands vs mainland
The table below shows at a glance the difference in costs (based on an average purchase).
| Cost item | Canary Islands | Costa Blanca (Mainland) |
| Tax on new buildings | 7% (IGIC) | 10% (IVA) |
| Stamp duty New construction | 1% (AJD) | 1.5% (AJD) |
| Tax Existing | 6.5% (ITP) | 10% (ITP) |
| Average 'Cost of Buyer' | ~10% | ~13 – 14% |
Conclusion
Buying property in the Canary Islands is from a cost perspective the most economical choice in Spain. Due to the absence of VAT and low ITP rates, the total purchase cost ("Cost of Buyer") is around 10%, while on the Costa Blanca you quickly head towards the 14%.
Crucial in this process is the guidance of a lawyer to avoid the legal pitfalls that the notary does not cover.
Frequently asked questions (FAQ)
How much tax do I pay on a house in Tenerife?
For an existing property in Tenerife, you will pay 6.5% transfer tax (ITP). For new construction, you will pay 7% IGIC and 1% stamp duty. In total, you should expect to pay around 10% buyer's fees including notary and lawyer.
Is real estate cheaper in the Canary Islands than in Spain?
Yes, additional purchase costs are significantly lower. Whereas on the mainland (such as Costa Blanca) you often pay 10% tax, in the Canary Islands it is only 6.5% (existing) or 7% (new construction).
Do I need a lawyer to buy a house in Spain?
Yes, this is highly recommended. The Spanish notary does not carry out an extensive investigation into debts, illegality or urban planning violations. A lawyer does do this due diligence, which is essential for a safe purchase.
What is the difference between IGIC and VAT?
IGIC (Impuesto General Indirecto Canario) is the indirect tax specific to the Canary Islands. The standard rate is 7%. This replaces Spanish VAT (IVA), which is 21% (general) or 10% (for residential properties) on the mainland.
About the author: Glenn Janssens is a lawyer specialising in Spanish real estate transactions and tax regulations. Since 2017, he has been helping Belgian and Dutch individuals and entrepreneurs safely purchase and structure real estate in Spain. He guides files from A to Z: from due diligence, ownership and tax control to estate planning and optimisation for residents and non-residents. Thanks to his years of experience, hundreds of handled files and focus on transparent communication, Glenn makes complex Spanish legislation understandable and practically applicable for every property buyer.
