Taxes When Selling a Property in the Canary Islands

Taxes When Selling a Property in the Canary Islands: Complete Guide by iCanary Properties

Selling a property in the Canary Islands can be a rewarding experience — but it’s also one that involves a range of taxes, legal requirements, and financial considerations. At iCanary Properties, we know that most homeowners want clarity, confidence, and accurate information before moving forward with their sale.

That’s why we’ve prepared this complete guide on the taxes involved when selling a property in the Canary Islands, so you can navigate every step with confidence, avoid unpleasant surprises, and maximize your financial outcome.

Understanding Property Sales in the Canary Islands

Before diving into the taxes themselves, it’s important to understand that selling a property in Spain — and particularly in the Canary Islands — follows a regulated process that involves both national and regional tax laws.

The Canary Islands have their own tax system (the IGIC replaces VAT), and several unique rules apply to both residents and non-residents. Knowing how these laws interact with your situation is key to planning an efficient sale.

Key Steps Before You Sell

Before putting your property on the market, you should:

1. Verify ownership and documentation – Ensure the property is correctly registered in your name and that there are no legal issues pending.
   

2. Check local taxes – Confirm that your annual taxes such as IBI and community fees are paid up to date.
   

3. Request an energy efficiency certificate – Mandatory in Spain for any sale.
   

4. Assess potential capital gains – Knowing your estimated gain helps forecast your IRPF or non-resident tax.
   

5. Consult a real estate and tax professional – At iCanary Properties, we connect you with experts who simplify every fiscal detail.
   

The Main Taxes When Selling a Property in the Canary Islands

There are five main taxes you should understand and prepare for when selling your home in the Canary Islands:

1. Personal Income Tax (IRPF)
   

2. Municipal Capital Gains Tax (Plusvalía Municipal)
   

3. Wealth Tax (Impuesto sobre el Patrimonio)
   

4. Property Tax (IBI)
   

5. Non-Resident Retention (3%)
   

Each one affects your final net profit in a different way — and how much you’ll pay depends on whether you’re a resident, a non-resident, or a company.

Let’s explore each one in detail.

1. Personal Income Tax (IRPF)

The Personal Income Tax (IRPF) applies to the capital gain you obtain from the sale of your property — that is, the difference between the sale price and the original purchase price, adjusted for associated costs.

How It’s Calculated

Your capital gain = (Sale Price – Sale Expenses) – (Purchase Price + Purchase Expenses)

These expenses may include notary fees, registration costs, legal fees, and real estate commissions.
The result is your taxable profit.

Tax Rates (as of 2025/2026)

• 19% for the first €6,000
  

• 21% for gains between €6,000.01 and €50,000
  

• 23% for gains between €50,000.01 and €200,000
  

• 27% for gains above €200,000
  

If you’ve made improvements or renovations that increase the value of your property, those investments can be added to your acquisition cost, reducing your taxable gain.

Exemptions and Reductions

There are several situations where you may reduce or even eliminate your tax liability:

1. Reinvestment in a main home – If you sell your main residence and reinvest in another main home within 2 years.
   

2. Sellers over 65 years old – Exempt from capital gains if selling their main home.
   

3. Losses on sale – If you sell for less than you bought, you can offset the loss against other capital gains.
   

4. Joint ownership adjustments – Each owner pays tax based on their share of ownership.
   

5. Non-resident rules – Non-residents pay a flat rate (see section 5).
   

At iCanary Properties, we always recommend speaking with a tax advisor to ensure all deductions are correctly applied and your declaration is optimized.

2. Municipal Capital Gains Tax (Plusvalía Municipal)

The Plusvalía Municipal (officially “Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana”) is a local tax charged by the Town Hall (Ayuntamiento) when urban land increases in value between the time of purchase and the time of sale.

How It’s Calculated

This tax is based on:

• The cadastral value of the land (not the building).
  

• The number of years you’ve owned the property.
  

• The coefficient established by the local government.
  

You can request this information from your local Ayuntamiento or let iCanary Properties help calculate it for you.

Key Points to Remember

1. Who pays it: Generally, the seller pays, unless agreed otherwise.
   

2. Exemptions: No tax if there’s no real gain (confirmed by documentation).
   

3. Recent reforms: Since 2021, sellers can choose between two calculation methods — the real gain method or the coefficient system.
   

4. Payment deadline: Within 30 business days from the sale.
   

5. Local variations: Each municipality sets its own rates, so amounts vary significantly.
   

We help our clients review the Plusvalía Municipal calculation before completing the sale to prevent last-minute issues or miscalculations.

3. Wealth Tax (Impuesto sobre el Patrimonio)

The Wealth Tax applies to individuals whose net worth exceeds €700,000 (after exemptions).
Although not every seller will be affected, it’s crucial to understand when this tax applies, especially if you own multiple properties or valuable assets.

Main Characteristics

• Who pays: Residents in Spain and non-residents who own assets in Spain.
  

• Exemption for main residence: Up to €300,000 per person.
  

• Tax base: Net assets as of December 31 each year.
  

• Tax rates: Progressive, between 0.2% and 3.5% depending on total wealth.
  

• Regional variations: The Canary Islands offer specific deductions and adjustments.
  

Practical Recommendations

1. Review your entire asset portfolio annually.
   

2. Confirm residency status, as it changes your obligations.
   

3. Consider ownership structure (individual vs. joint ownership).
   

4. Keep documentation updated for valuations and exemptions.
   

5. Consult an expert before the end of the tax year.
   

At iCanary Properties, we can connect you with trusted professionals who specialize in high-value property taxation in the Canary Islands.

4. Property Tax (IBI – Impuesto sobre Bienes Inmuebles)

The IBI is a municipal property tax paid yearly by every property owner in Spain.
Although it is not directly related to the sale, it must be up to date before selling.

Important Facts About IBI

• The liable person is whoever owns the property on January 1st of that year.
  

• Even if you sell mid-year, you remain responsible for that year’s tax unless you agree otherwise in writing.
  

• The amount depends on the cadastral value and the municipal rate (which varies between 0.4% and 1.1%).
  

• Proof of payment is required during the sale process.
  

• An unpaid IBI can delay or block the signing of the sale deed.
  

Why Keeping IBI Updated Matters

1. Smooth sale process – The buyer’s notary will check this.
   

2. Avoid penalties – Late payments incur fines and interest.
   

3. Increases buyer confidence – Demonstrates transparency.
   

4. Legal requirement – Essential document for the sale deed.
   

5. Reflects good ownership management – Adds professionalism to your sale.
   

Keeping your IBI fully paid is one of the simplest ways to ensure your property sale in the Canary Islands proceeds without issues.

5. Retention for Non-Residents (3%)

If you are not a tax resident in Spain, Spanish law requires the buyer to retain 3% of the sale price and pay it directly to the Spanish Tax Agency (AEAT) on your behalf.

Purpose of the Retention

This 3% serves as a prepayment of the non-resident capital gains tax.
After the sale, the seller must file a tax return (Modelo 210) within 4 months to determine the actual tax due.

How It Works

1. Buyer withholds 3% of the agreed sale price.
   

2. Buyer pays it to the tax office within 1 month.
   

3. Seller files a return to declare actual gain or loss.
   

4. Refunds can be requested if retention exceeds the real tax owed.
   

5. Penalties apply for not filing the declaration correctly or on time.
   

At iCanary Properties, we assist non-resident clients in coordinating this retention process, managing refunds, and ensuring compliance with Spanish tax law.

Other Costs and Considerations

Taxes aren’t the only expenses to keep in mind when selling your home.
Here are additional costs you might face:

• Notary fees – for the public deed of sale.
  

• Agency commissions – typically 3–5% + IGIC (7%).
  

• Certificate of energy efficiency – mandatory for the sale.
  

• Community fees – must be paid up to date.
  

• Legal representation or gestoría – optional but recommended.
  

Essential Pre-Sale Checklist

1. Ensure all local taxes are up to date.
   

2. Gather all property and energy certificates.
   

3. Verify mortgage cancellation or prepare for redemption.
   

4. Request updated nota simple from the property registry.
   

5. Work with a trusted real estate agent like iCanary Properties to manage documentation and buyer coordination.
   

Final Recommendations Before Selling

Selling a property in the Canary Islands involves multiple layers of financial and legal detail. The key to success lies in preparation, transparency, and professional advice.

Our Top 5 Recommendations

1. Hire a fiscal advisor early – Avoid surprises and optimize your tax position.
   

2. Keep every receipt and document – You’ll need proof for deductions.
   

3. Clarify who pays each cost – Taxes, commissions, and municipal fees.
   

4. Be transparent with buyers – It builds trust and speeds up the sale.
   

5. Work with local experts – iCanary Properties knows every local regulation and tax nuance.
   

Why Trust iCanary Properties

At iCanary Properties, we don’t just list your home — we guide you through every stage of the sale, ensuring all taxes and legal obligations are properly handled.

Our local experience in Gran Canaria, Maspalomas, and the South of the island allows us to provide personalized advice, from property valuation to fiscal optimization.

We work with:

• Certified real estate professionals
  

• Tax advisors specialized in non-residents
  

• Legal experts familiar with Canary Islands regulations
  

Our mission is to help you sell your property with confidence, knowing you’re fully compliant and financially optimized.

Conclusion: Selling Smart in the Canary Islands

Selling your property in the Canary Islands is more than just a transaction — it’s a financial event that deserves proper planning.
By understanding each tax — from IRPF to the Plusvalía Municipal — and working with experts who know the local market, you can achieve a successful, smooth, and profitable sale.

At iCanary Properties, we make the process transparent and stress-free, whether you’re a local homeowner or an international investor.

📞 Ready to Sell Your Property in the Canary Islands?

Contact iCanary Properties today for a personalized tax assessment and valuation of your home.
We’ll help you understand your fiscal obligations, estimate your real gain, and prepare everything you need for a successful sale.

👉 Email: info@icanaryproperties.com
👉 Website: www.icanaryproperties.com
👉 Location: Maspalomas, Gran Canaria

iCanary Properties — Your trusted real estate experts in the Canary Islands.