What Is the Difference Between ITP and IGIC?

If you're planning to buy property in Tenerife, you'll almost certainly come across the terms ITP and IGIC.

For many international buyers, these taxes can seem confusing, especially because you don't pay both. The tax that applies depends on the type of property you're buying.

Understanding the difference between ITP and IGIC will help you estimate your purchase costs more accurately and avoid surprises during the buying process.

What Is ITP?

ITP (Impuesto sobre Transmisiones Patrimoniales) is the Property Transfer Tax.

It applies when purchasing a resale property, meaning a property that has previously been owned.

Whether you're buying an apartment, townhouse, villa or penthouse from an individual owner, ITP will generally be one of the main taxes payable as part of the transaction.

The buyer is responsible for paying this tax after completion.

What Is IGIC?

IGIC (Impuesto General Indirecto Canario) is the indirect tax used in the Canary Islands.

It works in a similar way to VAT in mainland Spain, although the Canary Islands operate under their own tax system.

When purchasing a new-build property directly from a developer, IGIC applies instead of ITP.

The developer collects the tax as part of the purchase price and pays it to the relevant tax authorities.

The Main Difference

The simplest way to understand the difference is this:

If you're buying a resale property, you'll usually pay ITP.

If you're buying a brand-new property from a developer, you'll usually pay IGIC.

The two taxes are not charged together on the purchase of the property itself.

Knowing whether a property is considered a resale or a new build is therefore one of the first things your lawyer or estate agent will clarify.

Why Are There Two Different Taxes?

Spain has different tax rules depending on the type of transaction.

A resale property is considered a transfer between private parties, so Property Transfer Tax applies.

A newly built property sold by a developer is treated as the first sale of a new asset, meaning indirect taxation applies instead.

This distinction exists throughout Spain, although the Canary Islands use IGIC rather than the VAT system found on the mainland.

What Counts as a New-Build Property?

A property is generally considered a new build when it is being sold for the first time by the developer after construction.

Examples include:

• Newly completed apartments
• Off-plan properties
• Newly built villas
• Homes purchased directly from the developer before or shortly after completion

Once that property has been sold and is later resold by its owner, future buyers will usually pay ITP instead.

Does the Tax Rate Stay the Same?

Not necessarily.

Tax rates are established by the Canary Islands Government and can change over time.

Because tax legislation may be updated, buyers should always confirm the applicable rates before completing their purchase.

Your lawyer or tax adviser will calculate the exact amount payable based on the legislation in force at the time of completion.

Are There Any Other Costs?

Yes.

Whether you pay ITP or IGIC, you'll also need to budget for other purchase expenses, such as:

• Notary fees
• Land Registry fees
• Legal fees
• Mortgage-related costs, if applicable

If you're buying a new-build property, you may also need to pay Stamp Duty (AJD), depending on the transaction.

Looking at the total acquisition cost—not just the purchase price—is an important part of planning your investment.

How Do You Know Which Tax Applies?

Your estate agent and lawyer will confirm this very early in the purchasing process.

In most cases, it's immediately clear whether the property is:

• A resale home owned by an individual.
• A newly built property being sold by a developer.

This determines which purchase tax applies and allows your legal team to prepare an accurate estimate of the total costs involved.

Why This Matters When Comparing Properties

Two properties with the same asking price may have different purchase costs depending on whether they're new builds or resale homes.

Understanding which tax applies helps buyers compare opportunities more accurately and set a realistic budget from the beginning.

It's one of the reasons why professional advice is so valuable during the purchasing process.

Final Thoughts

Although ITP and IGIC can initially seem confusing, the distinction is actually quite straightforward.

If you're buying a resale property, you'll generally pay ITP. If you're buying a brand-new property directly from a developer, you'll usually pay IGIC.

Knowing the difference before you begin your property search allows you to budget more accurately and approach your purchase with confidence.

At Luxury World Properties, we help buyers understand every aspect of purchasing property in Tenerife, from taxes and legal procedures to ongoing ownership costs. Whether you're considering a brand-new development or a resale property, our multilingual team is here to guide you through every step of the process with clarity and confidence.