Friday, 16 August 2019 19:02

Living In Gran Canaria: Property Tax Guide

Laura Blog Post brightBuying a property in Gran Canaria costs about 10% of the price you pay once you factor in taxes and fees. Selling a property involves some costs but these only add up if you profit from the sale. The annual tax burden of owning a property in Gran Canaria is low.

Article by Gran Canaria estate agent Laura Leyshon from Las Palmas property.

Here is a summary of all the annual property taxes you have to pay in Gran Canaria.

IBI: An annual property tax set by the local Ayuntamiento that is between 0.5% and 1% of the official value of your property (much lower than the market value). The IBI rate in Las Palmas is currently 0.73% while other municipalities charge slightly different rates..

Other ongoing costs...

IBI is the only monthly tax cost that you have to pay in Gran Canaria (San Bartolomé de Tirajana charges an annual rubbish collection tax). However, if you live in a building or a complex you have to pay a monthly communidad fee which is your share of costs like communal electricity, lift and pool maintenance and insurance.

The amount varies depending on the building and the facilities and services it offers.

Non-resident property owners must pay income tax on any rental income, plus IGIC (VAT) if they rent their property on a short -term basis. Even if a non-resident property owner doesn’t rent out their property, they still have to pay a small annual Sunshine tax.

Some municipios, such as Mogán charge an annual rubbish collection fee. 

Gran Canaria property taxes at purchase

ITP or re-sale purchase tax

Buyers of re-sale property (as opposed to a new build) are required to pay the Impuesto de Transferencia de Propiedad which is 6.5% of the price paid for the property.

New Properties purchase tax

This is currently 7% if the house is finished or is being built at the time of the purchase. It is paid by the buyer.

A property buyer only ever has to pay one of the above two taxes.

Other Gran Canaria property purchase fees

While not strictly taxes you also have to pay Notary fees (around 300 euros for most properties, more if you buy with a mortgage) and Property Registry fees (around 300 euros). Most buyers use a Gestoria to handle the paperwork associated with a purchase (they charge around 250 euros).

Along with the 10% taxes and fees, you’ll need a minimum deposit of 10-20% if you get a mortgage (30% for non-residents) and 300 euros to pay for a valuation of the property you want to buy. Spanish banks also insist that you take out life insurance and property insurance at the same time as the mortgage. Legally your mortgage provider cannot force you to take out their insurance. However, it makes the whole process smoother if you do. You can always change to a better deal after a year. 

Gran Canaria property taxes at sale

Plusvalía municipal

Paid by the seller to the Ayuntamiento where the property is located, this is also called the impuesto sobre el incremento de valor de los terrenos de naturaleza urbana (IIVTNU).

You pay plusvalia on the increase in value of the land that a property occupies during the period that you own it (capped at 20 years) and the amount varies depending on the period of ownership and the rates set by the Ayuntamiento.

Incremento patrimonial

Capital gains tax paid to the Spanish Treasury; Based on the difference between the sale price and the price paid by seller when he/she originally purchased the property (you can offset costs of improvements so keep your new kitchen and bathroom facturas).

As of 2016, the capital gains tax rate in Gran Canaria is 19% for the first 6.000 Euros, 21% from 6.000 to 50.000 Euros and 23% from that last amount upwards.

However, one advantage of the fall in Gran Canaria property prices over the last 10 years is that few sellers have to pay capital gains tax.

Tax exemption

Avoid paying capital gains tax by reinvesting the money from the sale of a main residence property into another main residence property within two years. EU nationals, even non-residents, can also avoid this tax if they buy a new main residence property anywhere in the EU within two years.

To claim the exemption you need to be able to prove that a property has been your main residence. A good reason to get a ‘certificado de empadronamiento’ certificate from your Ayuntamiento as soon as you buy your house.

Mortgage cancellation fees

If you cancel a mortgage when you sell a property, expect to pay 1% or more of the outstanding balance for the privilege, plus up to 1000 euros to register the cancellation at the Notary and Property Registry. You can sometimes pass the mortgage on to the buyer if the terms are acceptable. 

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Tip of the day

  • How To Choose A Legal Gran Canaria Airport Transfer
    How To Choose A Legal Gran Canaria Airport Transfer

    Gran Canaria's hotels have to be licensed and offer a quality level of service as well as having insurance and complying with fire regulations. The same goes for the boats that take people out to watch dolphins, the companies offering jeep safaris, and even the holiday let apartments. 

    However, not everybody in Gran Canaria follows the rules. For example, there is a significant industry running illegal and uninsured transfers between Gran Canaria airport and the island's resorts. These cars, driven by locals and foreign-residents, are just private vehicles and the drivers are unregulated and uninsured. They don't pay tax and there is no way to hold them responsible if something goes wrong. 

     At Gran Canaria Info we believe that all people and all companies offering services to tourists should legal and above board.

    So, how do you know that your airport transfer service is legal and registered with the Gran Canaria authorities?

     Using legal Gran Canaria airport transfers

    It is quite easy to know if your airport transfer service is operating in a legal way because all registered transfers have the following...

     A blue license plate: Taxis and other public service vehicles in Gran Canaria all have blue plates.

    A VTC sticker in the window: This stands for Vehículo de Transporte con Conductor, the official designation for licensed transfer drivers ans chauffeurs.

    An SP sticker on the car: This indicates that the car offer a Servicio Publico or public service and is therefore allowed to pick up and transfer members of the public. 

    Parked in the transport zone: Official airport transfer vehicles don't park in the public car park of the airport. Instead they have their own parking zone right by the arrivals gates at the airport (next to the taxis and package tour buses). Your transfer driver therefore should not have to pay a parking fee before leaving the aiport. 

    How to spot an unlicensed transfer service

    Unlicensed drivers get away with offerring their service because they claim that they are just members of the public picking up a friend. They are allowed to stand at arrivals with a sign (just like any member of the public can).

    However, they also have to park their car in the public car park and will walk you there with your luggage, stopping to pay the parking fee at the meter. A licensed transfer driver does not need to do this because they have their own parking zone right by arrivals.

    Some unlicensed drivers don't even wait at the arrival gate because the official drivers recognise them and get annoyed. Instead they have to stand further away (often by the Spar supermarket or the car rental desks). 

    When an unlicensed driver drops you at the airport they will not want to be paid in a public area because this proves that they are charging rather than "transporting a friend" for free. 

    An unlicensed car will not have a blue license plate, or a SP or VTC sticker, and will often look like a private car (because it is a private car). 

    What's the problem with unlicensed airport transfers?

    Some people use unlicensed cars because they are the cheapest option and don't realise that they are unlicensed. 

    There are several problems with unlicensed services. The most obvious is that they are uninsured so if something goes wrong or there is an accident, you are not protected. The price that unlicensed drivers offer is only low because they cut corners (hopefully not literally). You have no way of even knowing if your unlicensed driver has a Spanish driving license, insurance and a good driving record. Licensed drivers are vetted regularly and must be fully insured and licensed to work.

    Another problem is that unlicensed transfers undermine the legitimate transfer drivers and businesses in Gran Canaria. Local drivers make a living from transfers and offer a legal, regulated service with minimum standards. Every time an unlicensed service undercuts them, it is effectively stealing from local people and the island economy.

    We believe that everybody in Gran Canaria deserves better!

    Gran Canaria Airport Transfer Services

    To find out more about the Gran Canaria airport transfer, see our Gran Canaria airport transfer article which explains the three different models; man/woman from pub with car, online transfer websites, and local transfer services.

    Or you can book a legitimate Gran Canaria airport transfer at a great price right here. Our service uses local drivers and supprts the island economy because all the money you spend stays in Gran Canaria.

    Alex Says: Using our service also helps the Gran Canaria Info team to keep providing quality local information here and in our Facebook Group

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