LEGAL & TAX GUIDE FOR THE CANARY ISLANDS

Obtaining sound legal advice is crucial when selling property, and this is equally important in the Canary Islands. At GoldAcre Estates, we guide you through the legal process, ensuring clarity and confidence when selling your home.

While it is not obligatory to hire a lawyer (Abogado) for property sales in the Canaries, many local sellers who feel comfortable with the paperwork and bureaucracy may choose to manage the process themselves, with our assistance. However, opting for legal representation can often provide peace of mind, as a lawyer will handle all the necessary procedures for you. Some sellers, particularly non-residents, may prefer to use the services of an accountant (Gestoría) to help manage tax matters, especially if they are eligible for tax retention refunds. Also having a POA in place with a legal representative ensures that you do not need to come to sign the title over.

If you decide to appoint a lawyer, or the circumstances of the sale require one, GoldAcre Estates can recommend a selection of reputable lawyers and accountants with whom we have established long-standing professional relationships. These independent experts have consistently demonstrated efficiency and diligence in their work.

Of course, you are free to choose any lawyer or accountant you prefer.

For added convenience, you can grant a “Power of Attorney” (POA) to your lawyer, allowing them to act on your behalf, including attending the notary for the title exchange.

When a buyer agrees to purchase your property, they will sign a ‘Sales Contract’, which GoldAcre Estates provides in both Spanish and English. We will then guide you through the next steps, including signing the ‘Purchase Contract’, typically within 28 days of the reservation, which is normally 10%. During this period, the buyer’s lawyer will conduct initial searches.

Note: The deposit is held until the Completion and Title date at the Notary.

TAX DICTIONARY FOR THE CANARIES

CAPITAL GAINS TAX

Capital Gains Tax is payable on the profit from selling a property. This is calculated based on the difference between the original purchase price and the official value at the time of sale. Currently, the Capital Gains Tax rate starts at 19% of the gain, with further details available upon request from our valuation team.

Certain expenses, such as Estate Agency Fees, extensions or improvements made during your ownership, may be deducted from the taxable gain. Our Valuation Team or an accountant can provide detailed advice on what qualifies for deductions.

ADDED VALUE

This tax is applied to the increase in the land value of your property since its last sale, calculated based on the Catastral Value (official land value). The local government determines the percentage rate for this tax, and it is the sellers’ responsibility to pay this tax.

TAXES FOR NON-RESIDENTS AND TAX RETENTION

If you are a non-resident when selling your property, the buyer or their legal representative is required to withhold 3% of the sale price and submit it to the Spanish tax authorities, this is retained against any potential Capital gain that has been made.

Once you or your accountant submit your tax declaration, the final Capital gains tax liability will be assessed. You may either potentially apply to receive a refund of a portion of the withheld amount or be required to pay additional taxes if your Capital gains tax liability exceeds the retention rate. This system ensures that non-resident sellers meet their Capital Gains Tax obligations before leaving Spain.

An important point of note when selling a buyers’ lawyer will require the property to be debt free, this means that all your local and council taxes must be up-to-date along with community fees as well as your Water and Electricity accounts. It is important if you are not paying your IBI if you are looking to sell, it is an important tax to ensure it is up-to-date. If there are any debts outstanding at time of time these could be deducted from your sales proceeds at the time of title at the Notary.

Speak to the GoldAcre Estates Valuation Team for more details and advice, or of course your local gestoria (Accountant).