Taxes when buying property in Spain (ITP, IGIC, IBI) – 2026 Guide

Investing in a house or apartment in the Canary Islands is an excellent business decision, but it requires proper budget planning. Many people focus solely on the asking price, forgetting that taxes when buying property in Spain make up a significant part of the final transaction costs.

As specialists in the premium market of southern Tenerife, we believe in full transparency. In this guide we explain in detail the additional costs you need to account for in 2026. Get to know the mysterious acronyms ITP, IGIC, AJD and IBI, and plan your investment with no surprises.

Taxes when buying property in Spain – the resale market (ITP)

Most transactions completed in Tenerife concern the resale market. If you are buying a pre-owned apartment or villa, the main cost you will bear is the property transfer tax, i.e. ITP (Impuesto sobre Transmisiones Patrimoniales).

The Canary Islands (including Tenerife) enjoy special, more favourable tax rates compared with mainland Spain. The standard ITP rate in Tenerife is 6.5% of the property value stated in the notarial deed. That is great news for investors, because in Valencia, Barcelona or Alicante the rate can be as high as 10%!

When analysing taxes on a resale property purchase in Spain, remember that ITP is always paid by the buyer, usually within 30 days of signing the notarial deed (Escritura de Compraventa).

The primary market – new developments (IGIC and AJD)

Things look different when you buy a property directly from a developer (the primary market). In this case ITP does not apply. Instead, two other Spanish property purchase taxes come into play:

1. The IGIC tax (the Canarian equivalent of VAT)

In mainland Spain, 10% VAT (IVA) is added to the price of a new property. The Canary Islands, however, have their own privileged tax system. Instead of VAT, here you pay the IGIC tax (Impuesto General Indirecto Canario), which for residential properties is just 7%.

2. The AJD tax (stamp duty)

When buying a new property you must also pay the documented legal acts tax, known as AJD (Actos Jurídicos Documentados). In Tenerife this rate is usually 1% of the property value (in some special cases it can be 0.75%).

The remaining transaction costs in Tenerife

When calculating taxes on a property purchase in Spain, you should also add the standard legal and administrative costs to your investment budget. On average we advise our clients to add around 8–10% to the asking price to cover absolutely all purchase costs on the resale market (or around 10–11% on the primary market). These include:

• Notary costs: They depend on the property value and the length of the deed, usually ranging from 600 to 1,500 euros.
• The Property Registry (Registro de la Propiedad): The cost of registering the new owner in the land registry is usually around 400–800 euros.
• Legal assistance/Gestoría: Help with obtaining the NIE number, opening an account and translations costs in the region of 1,500–3,000 euros, guaranteeing a completely safe transaction.

IBI – the running costs after the purchase

Once you become the proud owner of a home in Tenerife, you will be obliged to pay the annual local property tax, known as IBI (Impuesto sobre Bienes Inmuebles).

The IBI rate is set by the local town hall (Ayuntamiento) and usually ranges from 0.15% to 0.40% of the property's cadastral value (which is generally much lower than the market value). For a medium-sized apartment in southern Tenerife, the annual IBI tax usually comes to around 250–600 euros a year.

How to best prepare for taxes when buying property in Spain?

Understanding the local tax system is the absolute foundation of a safe, profitable investment. Taxes when buying property in Spain can differ significantly depending on the autonomous community where you plan to buy your dream home. From our perspective, Tenerife — with its unique IGIC system — offers foreign investors some of the best financial conditions in the entire country.

Our premium clients often wonder whether the settlement and notary process is complicated. The truth is that with substantive support from the right experts and an experienced real estate agency, the whole bureaucracy becomes completely painless and comes down to a few signatures.

If you want to explore the general fiscal rules and regulations on your own, it is always worth consulting trusted government sources such as the official website of the Spanish Tax Agency (Agencia Tributaria). Remember that reliable advice guarantees that Spanish property purchase taxes will not surprise you at any stage of the transaction, and your capital will remain one hundred percent safe.

Summary

Knowing the rates such as ITP, IGIC and AJD is the basis of informed investing. Although taxes when buying property in Spain may seem complicated at first, the Canarian fiscal system is one of the friendliest in all of Europe, offering markedly lower burdens than the mainland.

At Twoja Teneryfa Nieruchomości we not only find the best listings for you, but also provide full legal and tax advice. Contact us and we will prepare a precise cost calculation for your chosen property, keeping your capital safe.