Costa Adeje · €290,000 resale
| Item | Amount |
|---|---|
| Equity | €90,000 (31%) |
| Mortgage | €200,000 (69%) |
| Purchase costs (~9%) | ~€26,000 (ITP 6.5%) |
| Loan-to-value | 69% LTV |
| Example payment (20 yrs, 2.4%) | ~€1,050/month |
| Bank type | Major Spanish bank · Tenerife |
Region focus · Spain · Canaries · §34i
Buy property in the Canary Islands, Lanzarote or Fuerteventura: which taxes apply, including inheritance tax, and what banks lend
Tenerife, Gran Canaria, Lanzarote, Fuerteventura — in demand year-round, ITP 6.5% on resale — one of Spain's lowest transfer-tax rates. The bank finances the purchase price, not the 6.5 % ITP and the other incidental costs, so you must cover those from equity.
How much transfer tax do I pay on Canary Islands property?
When you buy a resale property in the Canary Islands, ITP applies at a flat 6.5 %. That is one of Spain's lowest transfer-tax rates. Only on new builds does the Canary IGIC of 7 % plus AJD 1 % replace Spanish IVA. The bank does not finance the ITP; you cover it from equity.
Not every bank lends against income in a foreign currency — we approach the ones that do. For the full evaluation, enter your income converted into euros.
Your estimate
- Monthly payment(calculation rate—)—
- Loan amount—
- Loan-to-value (LTV)—
- Purchase costs—
Our brokerage focus starts at a loan amount of around €300,000 — we arrange smaller loans too and will give you an honest read on whether it makes sense in your case.
Estimate, no guarantee. The interest rate is the calculation basis for this example, not a market rate or commitment — the rate you actually achieve depends on your credit profile, the property and the bank. Spain: max. 70 % LTV for non-residents. Purchase costs by region as on our purchase-costs page; the other items are guide values.
Buy property in the Canary Islands: which locations and tax rates count?
Of particular note are the prime locations (Tenerife, Gran Canaria, Lanzarote, Fuerteventura) and the tax rates: ITP 6.5 %; for new-build properties, IGIC 7 %.
- 0.5–3.5 % less tax than on the mainland when buying second-hand: Special Economic Zone, but not tax-free: second-hand purchases subject to ITP at 6.5 %, new-builds subject to IGIC at 7 % instead of IVA at 10 % (plus AJD 1 %). Compared with the mainland, 0.5–3.5 % less tax on second-hand properties, around 3 % on new-builds. Finance a new-build in instalments.
- Which island is right for me? Tenerife South: the largest tourist market. Gran Canaria: a mix of city and beach. Lanzarote: architecturally charming, less touristy. Fuerteventura: the most affordable, water sports.
- How much does a Spanish bank finance? For non-residents, as on the mainland: up to 70 % loan-to-value ratio, terms of up to 25 years — several major Spanish banks have their own programmes for non-residents. Spanish banks.
How much property transfer tax is payable when buying a second-hand property in the Canary Islands? Anyone buying a second-hand property in the Canary Islands — Tenerife, Gran Canaria, Lanzarote, Fuerteventura, La Palma — pays ITP at a flat rate of 6.5 %, calculated on the higher of the purchase price and the cadastral reference value.
This is one of the lowest rates of property transfer tax in Spain. It is important to note the distinction: only in the case of new-build properties is the Spanish IVA replaced by the Canarian IGIC (7 %) plus AJD (1 %); for second-hand properties, the ITP applies, not the IGIC.
Reduced rates apply to certain categories of buyers, while the standard rate applies to second homes owned by foreign nationals. The islands are popular thanks to their mild climate all year round and good accessibility via several airports.
Important information regarding financing: The bank finances the purchase price, but not the 6.5 % ITP or the other purchase costs — you must cover these from your own funds. As at July 2026; the regulations in force at the time of purchase apply.
Tenerife, Gran Canaria, Lanzarote, Fuerteventura: Tenerife — the largest island; the south (Costa Adeje, Los Cristianos) offers premium tourism, while the north is more affordable. Gran Canaria — Maspalomas, Meloneras, Las Palmas (university, all year round). Lanzarote — rich in art (César Manrique). Fuerteventura — a surfer’s paradise, longest beaches.
ITP 6.5 %, new-build IGIC 7 %: Canary Islands = Special Economic Zone. For the purchase of second-hand properties, the standard ITP rate of 6.5 % applies — one of the lowest rates in Spain, but not zero. For new-build properties, the Canarian IGIC (7 %) replaces the IVA (10 %), plus AJD at 1 %.
All in all, 0.5–3.5 % less than on the mainland when buying second-hand (ITP 6.5 % instead of 7–10 %), and around 3 % less for new-build properties (IGIC 7 % instead of IVA 10 %).
Up to 70 % LTV (loan-to-value ratio): Spanish banks offer the same financing terms in the Canary Islands as on the mainland: up to 70 % loan-to-value ratio for non-residents. Several major Spanish banks operate their own programmes for non-residents.
Temperatures range from 18–28 °C all year round: The Canary Islands have the most stable climate in Europe. Even in January, temperatures rarely fall below 18 °C in the coastal regions. Suitable for year-round letting or owner-occupation.
VV licence per island (rental): Tourist rentals with a Vivienda Vacacional (VV) licence. Rules vary by island and municipality. Southern Tenerife and southern Gran Canaria are traditional tourist areas. Residential areas are subject to restrictions in some cases.
5 major airports, accessible all year round: TFS/TFN (Tenerife South/North), LPA (Gran Canaria), ACE (Lanzarote), FUE (Fuerteventura). Direct flights all year round from all major German cities. 4–5 hours’ flight time.
What are the Canaries tax specifics on resale and new builds, and how much do banks lend?
On resale, ITP applies at 6.5%, and on new builds the Canarian IGIC of 7% replaces IVA, plus AJD at 1%. Spanish banks finance up to 70% loan-to-value for non-residents.
- ITP 6.5%, IGIC 7% on new builds (Tax specifics): The Canaries = a special economic zone. On resale, ITP applies at the standard rate of 6.5% — one of Spain's lowest, but not zero. On new builds the Canarian IGIC (7%) replaces IVA (10%), plus AJD at 1%. Overall 0.5–3.5% less than on the mainland on resale (ITP 6.5% instead of 7–10%), and roughly 3% less on new builds (IGIC 7% instead of 10% IVA).
- Up to 70% LTV (Loan-to-value): Spanish banks finance in the Canaries as on the mainland: up to 70% loan-to-value for non-residents. Several major Spanish banks have good branch networks on all four main islands.
- VV licence by island (Letting): Tourist letting with a Vivienda Vacacional (VV) licence. Rules differ by island and municipality. Southern Tenerife and southern Gran Canaria are classic tourism zones. Residential areas partly with restrictions.
What do two example cases from the Canary Islands show?
Two typical Canary Islands scenarios across different islands — as guidance for your own plan.
Calculate your costs quickly: Pre-filled with typical values for this region — just adjust the figures and the calculation updates instantly; the region and tax rate are already set.
What is in the full report by email?
Everything that the calculator on the page doesn’t show: equity requirement including purchase costs, all purchase costs listed individually, total interest and total costs — and, based on your income, how much you can afford under the 35 % rule.
We work with 15–20 of over 30 banks and will approach at least 2 of them regarding your case; we’ll discuss which ones are suitable during our conversation.
Which page covers property on Fuerteventura, Lanzarote, Tenerife and Gran Canaria?
Tenerife and Gran Canaria have their own markets, tax details and locations — a dedicated page for each. Fuerteventura and Lanzarote have their own pages too: Fuerteventura and Lanzarote.
Get the full evaluation by email: Everything the calculator does not show on the page: equity needed including purchase costs, every cost item, total interest and total cost — and, with your income, how much you can afford under the 35 % rule. We approach at least 2 of the 15–20 banks we work with for your case (31 in Spain, 14 in Portugal); which ones fit, we discuss in person.
How can you use a property in the Canary Islands as a source of capital?
The same rules of the Comunidad Autónoma de Canarias apply across every Canary island — from Lanzarote to La Palma without distinction. A paid-off property in the Canary Islands does not have to be sold to free up capital — it can be mortgaged instead.
Inheritance tax, Canary Islands: 99.9% relief, with no cap, since 06.09.2023 — groups I and II, meaning parents, children and spouses (art. 24 ter Decreto Legislativo 1/2009, as amended by Decreto-ley 5/2023). In the Canaries the inheritance relief also extends to group III.
For inheritance, the rules of the autonomous community holding the highest value of the Spanish estate apply. With a single Spanish property that is simply its region. The relief must be claimed within the filing deadline — miss it and it becomes contentious.
How far a Spanish bank will go on an unencumbered property, what changes with the owner's age, and what the released money may be used for is set out in full under releasing capital from a Spanish property.
A gift of the released money to a child is taxed in Germany, not in Spain — see inheritance and gift tax in Spain. Scope: inheritance tax, groups I and II (parents, children, spouses). Regional tax law changes regularly.
What was actually paid in this area. Portal prices are what sellers ask. What was recorded at the notary is published by the Spanish notaries themselves: the Portal Estadístico del Notariado — free, no registration, and searchable down to postcode level.
In the first quarter of 2026 the prices paid ran 29 per cent below asking prices, the widest gap since 2007. For a mortgage that is the figure that counts: the bank's valuer works from completed sales, not from listings. → Portal Estadístico del Notariado · What that means for your financing · Where the numbers come from
Case reports Canary Islands: Anonymised examples of how buyers financed their property in the Canary Islands.
Lanzarote property: what changes for financing?
On Lanzarote the financing follows the same frame as on the other Canary Islands: for non-residents the bank lends as on the mainland, up to 70 % LTV with a term up to 25 years. On a resale ITP of 6.5 % applies, and you cover it and the other incidental costs from equity. Tourist letting needs a Vivienda Vacacional licence, and the rules differ by island and municipality.
Mallorca — mortgage for non-residents: Financing in the region.
Marbella & Málaga — mortgage Costa del Sol: Financing in the region.
Valencia & Costa Azahar — mortgage for non-residents: Financing in the region.
Portugal — mortgage for non-residents: Algarve, Madeira, Lisbon and Porto at a glance.
Maspalomas new build · €380,000
| Item | Amount |
|---|---|
| Equity | €125,000 (33%) |
| Mortgage | €255,000 (67%) |
| Purchase costs (~10%) | ~€38,000 (IGIC 7% + AJD 1%) |
| Loan-to-value | 67% LTV |
| Example payment (20 yrs, 2.4%) | ~€1,340/month |
| Bank type | Major Spanish bank · Gran Canaria |
Model calculations without guarantee. Not binding offers. Terms vary depending on credit profile, property and bank. No tax or legal advice.
Frequently asked questions
Fuerteventura property: is the transfer tax the same as on Tenerife?
Yes. On a resale, ITP applies at a flat 6.5 % across the Canary Islands, including Fuerteventura and Tenerife. Only on new builds does the Canary IGIC of 7 % plus AJD 1 % replace Spanish IVA. The bank does not finance these taxes, so you cover them from equity.
Why are the Canaries cheaper for tax?
The Canaries are an EU special economic zone — but that does not mean no transfer tax is due. On resale, ITP applies at the standard rate of 6.5% on the higher of purchase price and cadastral reference; reduced rates exist only for primary-residence cases, not for non-residents buying a second home.
On new builds the Canarian IGIC (7%) replaces IVA (10%), plus AJD at 1%. Overall 0.5–3.5% less than on the mainland on resale (ITP 6.5% instead of 7–10%), and roughly 3% less on new builds (IGIC 7% instead of 10% IVA).
Which island is best for foreign buyers?
It depends on your strategy. Tenerife (south) offers the largest tourism market. Gran Canaria a good mix of city and beach. Lanzarote architecturally appealing, less touristy. Fuerteventura the cheapest and for water-sports fans.
Which banks finance in the Canaries?
We approach at least 2 of 15–20 institutions per case; several major Spanish banks have good branch networks on all four main islands. Which one fits your case is settled in conversation. Terms as on the mainland — 70% LTV, term up to 25 years.
How high are rental yields in the Canaries?
Tourism areas: 4–7% gross depending on location and island. Residential market: 3–5%. Year-round lettability is a major advantage — no seasonal gaps as on the Costa del Sol.
Can I let year-round in the Canaries?
Yes — thanks to the stable climate both summer and winter letting work (winter guests typically 1–3 months). The effective letting rate is therefore considerably higher than at pure summer destinations.
Request a mortgage
Planning a purchase in the Canary Islands? A free initial consultation in English — also German, French, Spanish, Russian. We review your situation and find the right bank in Spain.
This is not tax advice.
Related pages
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Monthly payment, loan and purchase costs by region straight away; total cost and equity needed by email.
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Buying a house on the Costa del Sol: What will the bank finance, and what won’t it?
Banks on the Costa del Sol usually provide non-residents with financing of up to 70 % of the lower of the purchase price or their own valuation.
Canaries · island
Tenerife — mortgage for non-residents
North–south split, two airports, the largest holiday market in the Canaries.
Canaries · island
Gran Canaria — mortgage for non-residents
Las Palmas as a real year-round city plus the tourism south around Maspalomas.
Content by Siegfried Perini — local brand representative since 2019, active in real estate since 1992, entered in the German intermediary register (§ 11a GewO) as a person directly involved in brokerage and advice. Point of contact for German-speaking buyers in Spain and Portugal. Brokerage by Olga Nikushkina, mortgage credit intermediary under § 34i German Trade Regulation (GewO); in Portugal through a locally licensed intermediary.