The next steps may not always be obvious, especially if you are looking for a home in the coastal districts of Tenerife or want to experience the diversity of big towns like Santa Cruz de Tenerife. When looking to purchase a home in Spain, it is also vital to think about the many taxes and fees that will need to be paid. All of this and more are broken down in further detail below.
Advice for Tenerife Property Purchases
It is our suggestion that you:
- Before committing financially, it’s a good idea to pay a visit to the property in question and get a feel for its current state, neighbourhood, accessibility through public transportation, etc.
- The house’s owner must be known. Verify the house’s legality, permits, and requirements with the local city planning department. Investigate things like building codes, flood maps, and zoning restrictions. Renovations and enlargements of existing structures may not be authorised. Consequently, this is a common cause of difficulties.
- What may go wrong if you buy an unregistered house in Tenerife? Not registering the property in the Land Registry to show that you own it outright.
- Before signing a deposit agreement at the Notary, it’s a good idea to have an expert read through the terms and conditions to make sure everything is in order.
- Get a lawyer’s opinion on any paperwork you’re about to sign, and have them include any escape provisions they think you might need.
- Don’t sign anything until you’ve had your lawyer look it over.
- You should NOT choose a barrister recommended by anyone affiliated with the Real Estate Agency. Hire a private solicitor at once; we can’t stress this enough.
- DO NOT bind yourself exclusively to one real estate agency by signing an exclusive agreement.
- Delegating all responsibilities to a lawyer with experience in dealing with conveyances in Tenerife is highly suggested to prevent any and all such serious errors, uncertainties, and delays.
Purchasing Real Estate on the Island of Tenerife from Abroad
The NIE is the sole mandatory condition for purchasing a home in Tenerife, as is the case across Spain (Foreigner Identification Number). A personal identification number, is required for all financial and real estate dealings on the island. A non-resident can begin the home-buying process after they get the NIE. While opening a bank account in Tenerife is not required, doing so will make tax and cost payments much simpler. The transaction for the acquisition of the property takes place in the presence of a Notary Public and is recorded in a public registry known as the Land Registry. Keep in mind that in Spain it is common to practise for the buyer and seller to sign a private contract of sale known as a “contrato de arras” (deposit contract) in which the buyer pays the seller a portion of the purchase price in advance of the notary signing the deeds to transfer ownership of the property.
Where can I get information on the costs and taxes associated with buying a home in Tenerife?
There are a number of taxes that must be paid in addition to the purchase price of a home, which can add thousands to the final price. This list includes some of the more notable ones:
- In the event of brand new homes or the first transfer of an existing property, the IGIC, or value added tax, must be paid. The statutory tax rate is 7%.
- In the event of resold homes or subsequent transfers, the Property Transfer Tax (ITP) must be paid. The levy is set at 6.5%. If value-added tax (IGIC) is not included in the transfer, this amount must be paid.
- Tax on Written Contracts (AJD). Both the VAT (IGIC) and the mortgage must be paid in the event of a home acquisition.
And then there are other costs to consider:
- Notarial act in the public record.
- A recording of the conveyance with the Land Registry.
- If you need a mortgage, you’ll need to pay for an assessment, a notary public, mortgage taxes, and Land Registry registration of the deed.
There are a number of other taxes that must be paid during the year, including the Land Tax (IBI), property taxes, Wealth Tax (if applicable), the Personal Income Tax (IRPF), and the Non-Resident Income Tax in Spain (if you do not continuously reside in Spanish territory). We’re here to help you pay your fair share of Tenerife property taxes. Thinking about buying or selling property in Tenerife Spain contact us today.
