ITP, IGIC and AJD: Which Taxes You Pay When Buying Property in the Canary Islands
When buying property in the Canary Islands, it is important to understand the difference between ITP, IGIC and AJD. Taxes change depending on whether you buy a resale property, a new-build property, a property with financing or an operation subject to notarial documentation.
Many foreign buyers look only at the property price, but when buying property in the Canary Islands you also need to calculate purchase taxes. The three most important terms to understand are ITP, IGIC and AJD.
Understanding these taxes is essential to know how much money you really need to complete the purchase. Two properties with the same price can have different tax costs if one is resale and the other is new-build.
The main difference between ITP, IGIC and AJD
ITP, IGIC and AJD do not all apply in the same way. The main tax depends especially on whether the property is resale or new-build.
In a resale property purchase, the main tax is normally ITP. In a new-build property purchased directly from a developer, IGIC usually applies and, in many cases, AJD may also be relevant.
AJD is connected to documented legal acts in public deeds and may appear in certain notarial or financing operations. For this reason, each case should be reviewed before calculating the final cost.
Simple summary
- Resale property: normally ITP
- New-build property: normally IGIC
- Notarial/documented acts: possible AJD
- Mortgage: may involve extra costs and procedures
- Each operation should be checked individually
ITP normally applies when:
- You buy a resale property
- It is a second or later transfer
- The seller is not selling as a first delivery of new construction
- The operation is not subject to IGIC as a new-build property
What is ITP when buying property in the Canary Islands?
ITP is the Impuesto de Transmisiones Patrimoniales. In a resale property purchase, it is normally one of the most important costs paid by the buyer.
This tax is calculated on the corresponding taxable base of the operation and must be considered from the beginning, because it is not included in the advertised sale price.
For many foreign buyers, the most common mistake is thinking that the property price includes everything. In reality, the buyer must have additional funds available for taxes and expenses.
What is IGIC when buying a new-build property in the Canary Islands?
IGIC is the indirect tax system used in the Canary Islands. When buying a new-build property, especially directly from a developer, it may replace the tax structure that in other Spanish territories would normally be connected to VAT.
If you buy a new-build property, you should check whether the operation is subject to IGIC and which other taxes or costs are added to the price.
The difference between new-build and resale property is essential, because it changes the main tax paid on the purchase.
Pay attention to new-build property
A new-build property can have a different tax structure from a resale property. Before comparing prices, compare taxes and real costs too.
AJD may appear in:
- Operations formalised in a public deed
- Certain new-build purchases
- Notarial acts subject to documentation
- Some operations connected to financing
- Cases requiring specific tax review
What is AJD and why can it affect the buyer?
AJD means Actos Jurídicos Documentados. It is a tax connected to certain notarial, commercial or administrative documents.
In a property purchase, AJD can be relevant especially in new-build operations or in acts formalised before a notary that meet certain requirements.
Since not all operations are the same, AJD should not be calculated automatically without reviewing the specific case.
Resale or new-build property: the tax changes
The most important question before calculating taxes is simple: is the property resale or is it a first transfer of new construction?
| Property type | Usual main tax | What the buyer should check |
|---|---|---|
| Resale property | ITP | Price, declared value, Nota Simple, charges, community, IBI and purchase expenses |
| New-build property | IGIC | Developer, invoice, applicable taxes, AJD, delivery date and conditions |
| Purchase with mortgage | May involve extra costs and documentation | Bank conditions, valuation, timing, notary and own funds |
| Investment purchase | Depends on the property type | Total cost, net return, future taxes and management |
Practical examples to understand the taxes
The following examples are indicative and help explain the logic. Before buying, the specific case should always be checked with an advisor, gestor or notary.
Example 1: resale property
You buy a second-hand apartment. Normally, you should calculate ITP, plus notary, registry and other purchase expenses.
Example 2: new-build property
You buy directly from a developer. Normally, you should check IGIC and possible AJD, plus deed and registry expenses.
Example 3: purchase with mortgage
In addition to purchase taxes, you should consider valuation, bank conditions, timing and available own funds.
Modelo 600: why it matters in the Canary Islands
Modelo 600 is used for the self-assessment of certain operations connected to Transmisiones Patrimoniales and Actos Jurídicos Documentados.
In a property purchase, this procedure may be necessary to file and pay the corresponding tax, especially in operations subject to ITP or AJD.
The buyer should make sure that the taxes are filed correctly and within the relevant deadline, because they are part of the real closing of the transaction.
What should be checked
- Which tax applies
- Who prepares the self-assessment
- What the taxable base is
- What the filing deadline is
- Which receipts remain after payment
If you buy from abroad:
- Calculate the full budget before travelling
- Keep funds available for taxes and expenses
- Organise NIE and documentation
- Confirm whether you are buying resale or new-build
- Do not sign arras without understanding the costs
- Ask for a clear estimate before signing
ITP, IGIC and AJD for non-resident buyers
A non-resident buyer can purchase property in the Canary Islands, but the budget must be organised carefully. Purchase taxes are normally paid in Spain and are part of the steps after signing.
If the buyer lives in Italy, Germany, the United Kingdom or another country, it is even more important to prepare funds in advance and understand exactly what must be paid after the purchase.
It is also useful to clarify whether the property is being bought to live in, as a second home, as an investment or for holiday rental.
Taxes are only one part of the real cost
In addition to ITP, IGIC or AJD, the buyer should think about community fees, IBI, basura, utilities, insurance, possible renovations and property management.
If the property needs works, Fuerte Reforma can help you evaluate a renovation before or after the purchase. If you buy for holiday rental, Tropic Booking can help with property promotion.
Real budget
The best buyer is not the one who looks only at the price, but the one who calculates the full cost of the operation.
Common mistakes when calculating purchase taxes
Many problems appear because the buyer does not calculate taxes properly before making an offer or signing an arras contract.
Do you want to buy property in the Canary Islands with a clear budget?
Canary Inmobiliaria helps you understand purchase costs, check documents, distinguish between resale and new-build properties, coordinate the steps and evaluate whether a property truly fits your budget.
Frequently asked questions about ITP, IGIC and AJD in the Canary Islands
Which tax is paid when buying a resale property in the Canary Islands?
In a resale property purchase, the main tax is normally ITP, plus other costs such as notary, registry and possible management expenses.
Which tax is paid when buying a new-build property in the Canary Islands?
In a new-build property purchased directly from the developer, IGIC should normally be reviewed and, in some cases, AJD may also apply.
What is the difference between ITP, IGIC and AJD?
ITP usually applies to resale property, IGIC to new-build property in the Canary Islands and AJD to certain documented acts in public deeds.
Are taxes included in the sale price?
Normally no. The buyer should calculate taxes and expenses separately from the published property price.
Can Canary Inmobiliaria help me calculate the costs?
Yes. Canary Inmobiliaria can help you understand the estimated total cost of a purchase, check the documentation and coordinate the steps before signing.