In Tenerife

Q&A on owning property in Tenerife

People have all sorts of questions about owning property in Tenerife, whether about going to the notary, the costs involved in a purchase, how to sell, valuations, taxes, you name it. In the main text part of the page I’ve listed some of the questions I’m most often asked. If anyone has any other questions that aren’t covered, please do post them in the comment box below and I’ll transfer them into the post and give an answer at the same time.

If your question is about complexes, community life or the Law of Horizontal Division please post it on the Living on a complex page HERE.



Q: When you buy an apartment. does the money have to be paid by bank draft or can it be transferred electronically? Also, does it have to be in Euros to go into a Spanish bank or can it be in Sterling if the seller wants it to go straight to the UK?

A: Monies can be arranged however the buyer and seller agree. Normally this is by bank draft from a Spanish bank in Euros at notary, but payment can equally be made by bank draft in Sterling, or drawn on a British bank, or even transferred electronically to any bank anywhere. Any notarial costs have to be deducted before the seller gets his or her money, but the way that money is paid to the seller at that point is purely a matter of negotiation between seller and buyer. Do be aware that it is in the interests of the buyer not to hand over any money until sure the new escritura has been signed, and in the seller’s interests to have the money before signing. Given the two conflicting interests, and the astronomical risks involved, it is worth going back to basics in my opinion and to hand over a bank draft in notary at the point of signing.


Q: If a buyer pays a deposit and changes his mind, who gets the deposit: seller or agent or both?

A: Normally, if a buyer pulls out of a purchase, s/he forfeits any deposit paid, but whether agent or seller gets it, or whether it’s to be divided, will depend on what is written in the contract.


Q:  Do you hand the notary the bank draft at the point of signing or give it to your solicitor to do so in our presence? Does the banker’s draft have to be for the agreed full amount? How does it all work?

A: To save time, paperwork, monies and keys are all arranged in the notary’s office before coming face to face with the notary himself. The money is never actually handed to the notary anyway, but to the vendor, and it would be entirely normal for each side’s lawyer or other legal helper to exchange monies and keys before the moment of actual signing. The bank draft can be for any percentage of the purchase price – how the monies are paid are entirely a matter of agreement between buyer and seller, though there is now a small limit of the percentage that can be paid in cash. The only rules in this respect are that the method(s) of payment must be listed in the escritura, and that all monies are traceable.


Q: We were thinking about buying our Spanish property in the children’s names for convenience and inheritance tax purposes but I’m worried about any tax/legal implications of doing such a thing.  Any advice?

A: There are no legal implications as such. They would own the property outright and legally it would be nothing to do with you. I’ve known several people buy a property in their children’s name (or transfer it to them later) for such reasons. Any monies involved in a purchase must always be accounted for at notary, but there are no other issues unless you gift them the money in Spain, in which case there would be an issue of Gift Tax: adult children have an allowance of around €16,000 and then a rising tax rate (see HERE for the rates, which are the same as for inheritance tax in Spain).


Costs & Taxes

Q: Could you tell me what costs are involved in buying a property, and how much I should allow for ongoing expenses?

A: You’ll find all the information detailed on THIS page.


Q: We own an apartment but don’t rent it out.We only use it for family holidays.We have just found out that we should be paying property tax based on assumed rental income? Is this true?

A: Yes, there is a notional rental income tax, which assumes legal but undeclared rental income. This is something that should be paid as part of the process of submiitting your annual tax return, which is a requirement for foreign property owners here. It used to be the case that foreign property owners here were required by law to have a gestor/accountant/fiscal representative in order to do this. The requirement to have someone registered to look your affairs here has been lifted, but you are still required to submit a tax return. Please note that this tax is payable by all (including Spaniards themselves) who are property owners but non-resident in the Canaries. Please have a read HERE for all costs you might expect to have to cover as a result of owning property.


Q: How and when is the Spanish tax due and payable? We have been told once a year, quarterly, that we need to submit a tax return each, all conflicting information. We know we cannot claim utilities against the income, only community charges and local taxes and we think we have to pay 24% on the rest.

A: Resident owners of property here should be submitting annual tax returns, but non-resident owners must also submit returns. Those who are in receipt of declarable rental income submit a modelo 210 quarterly. With regard to the tax rate, at least for 2014, as for 2012 and 2013, it’s 24.75%: it used to be 24% but the rise was imposed as a “special temporary crisis measure”. For jointly owned properties, a return has to be submitted in the name of both owners, but this can be a joint return, and does not necessarily have to be two separate returns. As far as deductions are concerned, non-resident property owners who let out can now deduct all expenses connected directly with the letting of the property, eg electricity, water, cleaning services, etc. A gestor, asesor or accountant will help with the computations so that the deductions are allowed for the period of rental. Bear in mind  too that the notional rental income tax is charged on any unrented part of a year, or a whole year if no rental income at all is received, and this declaration is submitted annually. Non-resident owners also have to prove they are fiscally resident outside of Spain, so will need to get an annual certificate of fiscal residence from the Inland Revenue or other national tax department.


Q: Could you please advise me where I can download the modelo 210 declaracion ordinaria for impuesto sobre la renta de no residentes?

A: It’s HERE.


Q: Just within 4 years of buying my property I received a notice from the tax office saying that their valuation was more then stated in the escritura and that I had to pay the purchase tax on the difference between the two prices. I complained about the valuation and the time they had taken to ask for their tax, but they replied that the law allows them up to 4 years to notify and charge you interest on the delay. What else can be done about this?

A: This happens all too frequently when prices are far below what would be expected, and the tax office is correct to say that they have four years to demand a “top-up” sales tax. The problem has arisen, though, because of abuse in the past on the part of those directly involved with property transactions. “Black money” has traditionally been a standard part of such transactions and everyone, even notaries, knew it was happening. The tax authorities’ only recourse was to take an independent view of the transaction and “assess to tax” any property for which they did not believe the price noted in the escritura. The problem is becoming quite serious now that prices are falling genuinely here, with people paying sometimes just 50% of a “tax value”. What will happen, for example, to all those properties bought as repossessions from the banks? These are sometimes at knockdown prices, abusive in several other senses, of course, but there could well be a serious tax bill waiting up to four years down the line for anyone who buys property far below what the tax office will accept as the tax value. As to what can be done about it – nothing, I’m afraid, as far as I know.


Q: Please can you tell me what a Plusvalia is and why Solicitor says it must be paid by the Vendor and what it is based on?

A: Please have a read HERE  where I’ve explained it.


Q: We have been advised that we should arrange to transfer the ownership of our apartment into a UK Company to avoid substantial inheritance tax should anything happen to either of us, can you advise us on the above issues please?

A: I have to advise against it in the strongest conceivable terms. Unless the company is already trading in its own right, the scheme runs a clear and significant risk of being considered fiscal fraud by the Spanish tax authorities, and that is a very very serious issue indeed. There are occasions when such a transfer into a company can work, but very often it is not to the advantage of anyone. Please read what I wrote HERE and seriously consider an alternative solution to the inevitable inheritance tax bill.



Q:  Can I get a valuation of an apartment I am considering buying to submit to the tax people BEFORE I sign anything? If so, who gives me this valuation? and is this something my solicitor would do as part of his searches etc.

A:  Yes, you can get a valuation up front, and it’s a good idea if someone is in some doubt about whether the tax office will accept the escritura price. It can take up to a couple of months to get, but once it is given, the Hacienda has to stick with the value. It’s not an automatic part of a search, no, but it’s something I or any conveyancer, including an abogado, would do if specifically requested. You don’t submit it “to” the tax people, though, you get it “from” the tax people, the office in the Zentral Centre in Playa de las Américas … and keep it as a record of the fiscal value of the property so that the tax is known beforehand, and cannot be surcharged later.



Q:  We are considering letting out our residential apartment for three months. How can I find out what we are required to have or provide – things like complaints book (what form should this take?), fire extinguisher, smoke alarm etc?

A:  You don’t need those things. A fire extinguisher and smoke alarm are a good idea of course, but not legal requirements. Complaints books are for commercial lets so won’t apply to you (and would only apply to the sole agent anyway if you had a tourist property). You just need a contract. For your own security, please read my “Renting a property” page in the Your Rights tab (direct link HERE) before committing yourself to anything.


Q: Is there a list of residential property areas to assist buyers?

A:  There’s not a list (that I’m aware of) of residential property, but have a look at my links page and you’ll find links to official resources for touristically licensed properties. To a considerable extent they’re exhaustive, so it will be a very good bet that if you can’t find a complex in either of those sites, it’s residential.



Q: How are hipotecas (mortgages) registered? Is it registered against the Referencia Catastral of the property?

A: A mortgage is registered in the land registry and shows up as a charge on the property in any conveyance or search.


Q:  I’ve been told it’s compulsory to have life and buildings insurances with my mortgages. Is this correct?

A: It is compulsory to have buildings insurance with a mortgage under all circumstances, but despite what the banks frequently say, life insurance is not compulsory unless it is written into the terms of the mortgage document itself. Any policy you have for life insurance is likely to be very evasive about how to cancel. Most, though, have a clause somewhere allowing that the policy will lapse “if you cease payments”. Anyone with life insurance on a mortgage should also note that in the sad event that this becomes payable, it will come off the mortgage amount, not be paid as a cash lump to the insured.


Q: I am a 50% owner of a property which is mortgaged, but the mortgage is in the name of my co-owner. What happens if he stops paying?

A: The property can be repossessed and the bank would then go after your co-owner for any deficit after the property had been auctioned. The bank could not chase you for any subsequent debt, but you would evidently have lost the property.



Q: What are the costs involved in selling our property in Tenerife?

A: Please have a look at the Notarial System & Costs page HERE: as you will see, as vendors you will be liable for plusvalía. Please also look at the Capital Gains & Inheritance Taxes Page HERE for an explanation of the capital gains tax payable, and the retention in lieu made for non-resident vendors. If you are using an estate agent, then there will be commission involved if they find you a buyer – this is normally 5% of the sale price but might be more or less depending on the particular agent.


Q: I am thinking of putting a for sale sign outside my house. I have it with a few estate agents. Would estate agents have any problem with this.

A: They shouldn’t – it’s your house, and even an exclusive agreement with an agent wouldn’t preclude you trying to sell privately! If your property is part of a complex, technically you may not put up se vende (or se alquiler) signs, but a blind eye is frequently turned to them. The biggest problem you will find  is that agents will be less likely to bring clients to view, fearing that they will jot down your number and deal directly.


Q: The agent selling our house says we need an energy certificate before they can show our house to clients. Is this true? and who should do this job as the agent said they have there own people.

A: Anyone in the Canaries wishing to organize one of these certificates, or to confirm that someone else is legally able to issue them, should contact the Consejería de Empleo, Industria y Comercio. Dirección General de Industria y Energía, C/ León y Castillo, 200; Edificio Servicios Múltiples III , Planta 4ª; 35071 Las Palmas de Gran Canaria – tel: 928-899-400 . The full details on what is actually required (no, agents don’t need to be in possession of the physical certificates before they do viewings) are HERE.


Q: What happens if you receive a fine, either refuse to pay or don’t have the means to pay and then a charge is levied against the property? Does this just stay there then until such time that the property is sold?

A: Yes, though a fine will attract “legal interest” of around 6% or so, plus possible penalties and costs so will end up being more than the fine levied. A fine charged against a property will show up when the new buyers’ conveyancer carries out a land registry sesarch – it will show up in the same way as any charge on the property, e.g. a mortgage. If a property is never sold but inherited on the death of the owner who was fined, inheritance tax would be payable before the property could be transferred. When it is transferred, it is treated like a sale, indeed the tax payable on a transfer is the same tax as that paid on a sale because a sale is, effectively, a transfer of title. Any fine would be payable at this point, along with interest, and along with transfer and inheritance taxes, before the property could be registered in your heirs’ names.

17 Responses to Q&A on owning property in Tenerife

  • My wife and I are considering buying a property in Tenerife from a couple we know who live quite close to us in north west England. Would it be possible to use a local British Solicitor for the legal requirements, and transfer the money solely in England or would the transaction require the employment of a local Solicitor, and would the transfer of money have to take place in Tenerife.

  • You don’t actually need a qualified lawyer, since conveyancing does not require legal qualifications in Spain – it’s the same in the UK. Even between friends, though, it’s important to have someone independent carry out a conveyance, and someone, indeed, will need to draw up the new escritura, arrange the notary and carry out the after-sale administration, unless you are confident of doing this yourself. Whoever you use, though, it should be someone who knows Spanish (indeed, Canarian) property law, and often UK solicitors don’t know the detail. You can, though, transfer the money in the UK, and make the payments in Sterling, though a Euro equivalent would be entered into the escritura for the stated value.

  • And for the record. Janet can act as your conveyancer. Probably with more expertise, than many lawyers. And I speak from experience, of how much a professional service she will give.

  • Both information on tranfer money is wrong. Your bank in Ireland charge 30 euro to accept draft but they charge one per cent to send the draft to Spain for collection, Even transferring it on line from Spain cost a lot of money. I remember many years ago when I bought the house it only cost 60 to send my money from Ireland to Spain but there are Hugh charges to send money from Spain to Ireland

  • I own a property in Tenerife that I wish to sell. It is joint names with my now deceased husband will this cause problems with the sale?

  • Yes, I’m afraid so. It will need to be transferred to your name first and inheritance tax paid. If a will was in place this will be a relatively straightforward process, though one you might need help with.

  • I am not resident in Tenerife and do have a Spanish will. Does this make a difference?

  • No, really it doesn’t. The question is whether your husband had a Spanish will. Residence isn’t an issue because the advantages that residents had were abolished a couple of years ago (see HERE). I think you need to speak to a lawyer with some urgency.

  • Thanks for your comments. Yes we both had Spanish wills, but will speak to a lawyer.

  • Hi Janet.
    My wife owns a property in Tenerife, but because we live in England, and my wife’s father lives in Tenerife, and also owns property of his own over there, we have let him deal with the financial side of things on our behalf.
    While in Tenerife recently, we visited my wife’s bank for an update on things financial, when we were informed that my wife has a “residents bank account,” when in fact she is not “resident ” in Tenerife.
    This may have happened as a result of a genuine mistake or by things being “lost in translation.” How-ever it has happened.
    Are there any implications in this, and if so what should we do about it?
    Thanks Paul.

  • Accounts here are opened either as resident or non-resident account. They don’t change from one to the other, so someone who becomes a resident after opening a non-resident account would actually need to open a resident account rather than change their non-res one to resident. So your wife’s account would have been opened as a resident account, and the bank may at some point ask for evidence that your wife “continues” to be a resident. If she has a Certificado de Registro showing registration with the police there will be no problem, but it is possible that in the absence of such evidence the bank would freeze the account. It would clearly be best to check with the bank what the situation is, so as to be able to avoid such an awkward situation.

  • Where is the best place to buy a 4 bedroom villa next to sea

  • Well really the big villas tend to be back from the sea in general, but your best bet is to contact a few estate agents (there are links to a few on my Links page) and give them your criteria. They’ll be able to send you details of anything they have that might suit you.

  • We are selling our property in tenerife & would like to know what the costs involved are .

  • Please have a look at the Notarial System & Costs page HERE: as you will see, as vendors you will be liable for plusvalía. Please also look at the Capital Gains & Inheritance Taxes Page HERE for an explanation of the capital gains tax payable, and the retention in lieu made for non-resident vendors. If you are using an estate agent, then there will be commission involved if they find you a buyer – this is normally 5% of the sale price but might be more or less depending on the particular agent.

  • Hello Janet,
    Because of bad management, our apartment complex has incurred debts from unpaid invoices and holiday money owed to staff in 2012. The then Community President and Manager who were dismissed in 2013, are refusing to corporate and take any responsibility for debts incurred during their term in office and the Manager is also seeking compensation for unfair dismissal through the Spanish workers law. Is there anything the Community can do to make a legal claim from the Manager and President; both of whom also own apartments on the complex and also owe money to the Community for their apartmeng Community charges? Can you advise please.

  • This is the sort of question that needs qualified legal advice, and isn’t anything I can help with. Your community or administrators should have a lawyer, and that is the place to ask. If your community doesn’t have a lawyer, it needs to get one because apart from knowing what to do, I suspect this is a case where the order in which to do it is also vitally important.

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Janet Anscombe
Tenerife News
September 2014
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