Fuerteventura homeowners and tenants tax deductions for housing in Fuerteventura

How can you pay less tax on your income tax return? We indicate the main deductions on housing in Fuerteventura, whether you own or rent a house on the island.

Homebuyer Benefits and Deductions

Depending on the nature of the property, the buyer will be taxed by the Canary Islands General Indirect Tax (IGIC) if it is a new construction, or by the Transfer Tax (ITP) in the case of a second-hand property.

In addition to these indirect taxes, there are substantial benefits in the area of direct taxation. The Personal Income Tax for the 2025 tax year (whose returns will be formalized in the spring of 2026) consolidates in the Canary Islands a package of regional deductions designed to facilitate access to housing, stimulate the market and fix the resident population, introducing substantial improvements with respect to previous years.

Autonomous Community Deduction for Investment in Habitual Housing

In the area of state taxation, the deduction for the acquisition of primary residence was eliminated for all purchases made after January 1, 2013, maintaining only a transitory regime for purchasers prior to that date.

However, the Autonomous Community of the Canary Islands has preserved and updated its own autonomous deduction for investment in primary residence, applicable to the full amount of the autonomous community’s personal income tax.

For the 2025 fiscal year, the Canary Islands legislator has introduced profound modifications through Law 9/2025, of the General Budget of the Autonomous Community of the Canary Islands for 2026, with the purpose of mitigating the effects of inflation and facilitating access to the real estate market for the new generations.

The amount and percentages of this deduction are structured in a progressive manner, benefiting average incomes and, especially, young taxpayers. The application scheme is as follows:

Taxable Income Level (General + Savings)	Deduction Percentage (General Taxpayers)	Deduction Percentage (Taxpayers under 40 years of age)
Less than 25,500 euros	5,00%	5,50%
Equal to or more than 25,500 euros and less than 46,455 euros	3,50%	4,00%

Source: Ministry of Finance of the Canary Islands

Recent updates have raised the income limits required to access the deduction. The upper limit of taxable income has increased from 24,000 euros to 46,455 euros in individual taxation, increasing this limit by an additional 15,315 euros in the case of joint tax returns.

Also, the threshold defining a taxpayer as “young” to benefit from the increased rates has been extended from 35 to 40 years of age.

For the application of this deduction, the law establishes a maximum deductible base of 6,000 euros per year for each taxpayer, on the amounts actually paid during the year for the acquisition or rehabilitation of the dwelling that constitutes or will constitute the habitual residence.

In cases where the purchase has been made through third-party financing (mortgage), the basis will include both the amortization of the loan principal and the interest paid and the expenses derived from life and fire insurance, provided that the contracting of the latter has been a mandatory condition imposed by the financial entity for the granting of the loan.

Reductions in Transfer Tax (ITP)

For used or second-hand housing, the general rate of the Property Transfer Tax (ITP) in the archipelago is 6.5%. If a territorial comparison is made, this percentage turns out to be one of the most attractive in Spain, being considerably below the 8%, 9% or even 10% required in other autonomous communities for acquisitions of a similar nature.

With the entry into force of Law 9/2025, the Government of the Canary Islands has deepened this competitive advantage, broadening the spectrum of reduced ITP rates to promote the purchase of primary residences by strategic demographic sectors.

The current legal framework allows the application of a reduced rate of 5% in the transfer of the home that is to be the buyer’s habitual residence, provided that three fundamental requirements are met at the same time :

1. Age of the Acquirer: The purchaser must be under 40 years of age on the date of accrual of the tax (time of signing of the public deed).
2. Economic Capacity: The income of the acquirer (calculated as the sum of the general taxable income and the savings taxable income in the IRPF) cannot exceed 46,455 euros in individual taxation. For family units that opt for joint taxation, this limit is increased by 15,315 euros.
3. Value of the Property: The value of the taxable base of the property transferred cannot exceed the legal limit of 200,000 euros.

The tax structure also provides for the application of super-reduced rates, which can be reduced to 4% or 0.4% in cases of extreme vulnerability or for the protection of the family.

Thus, large families in the general category can benefit from reductions by extending the limit of the value of the property up to 300,000 euros, while for large families in the special category this limit is raised to 400,000 euros. These benefits are also extended, under specific parameters, to taxpayers with a legally recognized degree of disability or to women victims of gender violence.

Source: State Tax Agency, Deductions in the Canary Islands.

Taxation of New Construction: IGIC and Financial Efficiency

The new construction market is subject to the Canary Islands General Indirect Tax (IGIC) instead of the peninsular VAT or ITP.

The general tax rate for the delivery of buildings intended for housing is 7%. However, the Canary Islands tax system has designed a mirror of tax benefits identical to that of the ITP to ensure that purchasers of new buildings are not penalized in comparison with second-hand purchasers.

Thus, a reduced IGIC rate of 5% -and even 0% taxation scenarios- may be applied to the acquisition of a first home by people under 40 years of age, large families and other taxable groups, operating under the same income thresholds (46,455 € individual) and property value limit (200,000 €) consolidated in Law 9/2025.

The correct presentation of the tax forms by the real estate consulting team is a critical factor to ensure that the buyer crystallizes these savings without exposing himself to contingencies before the Canary Islands Tax Agency.

Consult with Destiny Home so that we can manage your documentation in the sale and purchase of real estate in Fuerteventura..

Tax Strategy for the Seller: Optimization of Equity Gain

The sale of a property does not only consist of a marketing plan to put it on the market in the best conditions; the advice of the real estate agency includes the study of the fiscal impact of the transfer.

The sale of housing generates these tax obligations:

• the taxation of the capital gain in the IRPF (or in the IRNR for non-residents), and
• the liquidation of the municipal capital gain.

The Exemption for Reinvestment in Habitable Housing

The Spanish legal system provides a mechanism to protect the assets of citizens who need to change their residence: the reinvestment exemption.

This regulation establishes that the capital gain obtained from the transfer of the taxpayer’s principal residence will be excluded from taxation if the full amount obtained in the disposal is reinvested in the acquisition, construction or rehabilitation of a new principal residence.

In order to consolidate the right to this exemption, the tax administration requires the verification of several technical precepts:

1. Proof of the character of Habitual Residence: Legal ownership is not sufficient; the property transferred must have been the effective, principal and permanent residence of the taxpayer for a continuous period of at least three years prior to the sale.
2. Reinvestment Timeframe: The law provides a horizon of certainty by setting a reinvestment period of two years. This period can be computed both forward and backward. That is to say, the taxpayer can sell his home and have up to 24 months to formalize the purchase of the new one; or, if he has liquidity, he can first acquire the new residence and have a period of two years to materialize the sale of his former habitual residence. In cases of purchase by means of payments on account to promoters or cooperatives, the fractioned payments also enjoy this temporary protection under specific conditions.
3. Proportionality Principle: In order for the exemption to be total, the amount to be reinvested must be equivalent to the liquid amount obtained in the sale (transfer value discounting the inherent expenses and the cancellation of the outstanding balance of the mortgage loan that financed the sold property).

Tax Estate Protection for Seniors over 65 years of age

The analysis of the portfolio of clients of European origin in Fuerteventura shows a notable concentration of owners who, upon reaching retirement or pre-retirement age, decide to reorganize their assets, liquidating properties on the island to repatriate capital or adapt their lifestyle.

For this demographic stratum, the Personal Income Tax Law has articulated exemptions that shield their wealth:

1. Transfer of the Habitual Residence: Taxpayers who have reached 65 years of age at the time of the sale enjoy an absolute exemption on any capital gain derived from the transfer for valuable consideration or profit of their habitual residence. This benefit is extended under identical conditions to persons who are in a legal situation of severe dependence or great dependence.
2. Transfer of Real Estate Other than the Habitual Dwelling (Second Residences): Exemption for the sale of second residences, holiday apartments or commercial premises by persons over 65 years of age. The capital gain derived from the transfer of these assets will be exempt from taxation if the total amount obtained is to be used in its entirety to constitute an assured life annuity in favor of the taxpayer. The legal framework imposes a strict time limit of six months from the date of disposal for the formal constitution of such annuity. In addition, the law sets a maximum quantitative limit of 240,000 euros on the amount whose reinvestment entitles the taxpayer to the exemption.

Legal Certainty and the 3% Withholding Tax (IRNR) for Foreign Sellers

The high percentage of transactions involving a seller of non-resident foreign nationality requires that the management of the sale and purchase includes advice on Non-Resident Income Tax (IRNR). Spanish tax legislation contemplates a specific tax fraud prevention mechanism for these cases.

When an individual or legal entity without a permanent establishment in Spain transfers real estate located in Spain, the purchaser – regardless of whether the purchaser is a resident or a foreigner – is obliged to withhold 3% of the agreed consideration (the sale price).

This 3% does not constitute the definitive tax, but a payment on account or advance payment. Once the withholding has been made, the non-resident seller is obliged to file the definitive IRNR return within a period of three months starting from the end of the period granted to the buyer for the payment of the withholding.

The real capital gain obtained in the sale is calculated and the corresponding tax rate is applied (indicatively, 19% for tax residents in the EU, Iceland or Norway). If the amount resulting from this calculation is lower than the amount of 3% that was withheld at the time of the sale, the non-resident taxpayer has the legitimate right to request a refund of the difference from the Tax Agency.

Destiy Home, as part of its comprehensive service, ensures that the seller has no outstanding debts for Real Estate Tax (IBI) and that he/she has the tax residency certificate from his/her country of origin duly apostilled or legalized, thus avoiding seizures or delays in the return of funds.

The Impact of the Municipal Capital Gains Tax (IIVTNU)

The sale of a property gives rise to the Tax on the Increase in Value of Urban Land (IIVTNU), or municipal capital gains tax. This tax, of local jurisdiction, is levied on the increase in value of the land from its acquisition to its transfer.

The municipalities of Fuerteventura, such as La Oliva (a municipality that includes high demand areas such as Corralejo, Lajares or El Cotillo) or Puerto del Rosario, publish and update in their tax ordinances the coefficients applicable for the calculation of the tax.

Following the recent pronouncements of the Constitutional Court and the consequent legislative reform, the seller has the legal guarantee of being able to choose between two calculation methodologies, applying the one that is most economically favorable to him :

1. Objective Estimation: The tax is calculated by multiplying the cadastral value of the land at the time of sale by a coefficient fixed by the Town Hall, which varies according to the number of complete years of tenure of the property. For example, according to the coefficient updates for 2025 documented in municipalities such as La Oliva, rates start at 0.15 for short periods of tenure (1 to 3 years), rising to 0.16 in the fourth year and 0.18 in the fifth year.
2. Real Estimate: The calculation is based on the real and arithmetic difference between the transfer value and the acquisition value of the property, applying the proportion that the cadastral value of the land represents over the total cadastral value.

Strategic Guide to hosing tax deductions in Fuerteventura (2025)

Refurbishment and Energy Efficiency

The Spanish Government, within the framework of its ecological transition policies, has approved through Royal Decree-Law 7/2026 the official extension of personal income tax deductions for energy efficiency improvement works in homes.

This extension of national scope extends the validity of the tax benefits until December 31, 2026 for actions undertaken in private homes, and until December 31, 2027 for those integral rehabilitations that affect complete residential buildings. The regulatory framework structures these temporary deductions in 3 staggered levels of technical requirement and financial reward:

Basic Level: 20% deduction

For targeted improvement works. It allows the taxpayer to deduct in the state tax liability 20% of the amounts invested in works carried out in his habitual residence, or in properties owned by him that are leased for use as a dwelling, or even those in expectation of lease (provided that the property is leased before December 31, 2027).

• Technical Requirement: The executed works must achieve a reduction of at least 7% in the heating and cooling demand of the dwelling. This type of percentage is usually achieved through direct interventions on the thermal envelope, such as the replacement of windows with thermal break windows and low emissivity glass, or the injection of insulation in facades and roofs.
• Financial Parameters: The maximum annual basis subject to deduction is 5,000 euros, which translates into a maximum direct tax saving of 1,000 euros in the fiscal year. The works must be completed and paid for before December 31, 2026.

Middle Level: 40% deduction

For rehabilitations aiming at a deeper environmental and economic impact, the State assumes almost half of the cost of the intervention. Taxpayers can apply a deduction of 40% of the amounts paid under more rigorous premises.

• Technical Requirement: A minimum reduction of 30% in the non-renewable primary energy consumption indicator must be certified, or alternatively, the property must achieve a jump in its energy rating to achieve the coveted “A” or “B” rating. Interventions such as the installation of air conditioning and domestic hot water systems using aerothermal energy, combined with photovoltaic solar panels and integral insulation, are the usual ways to achieve these parameters.
• Financial Parameters: The maximum annual deductible base is increased to 7,500 euros, allowing a direct tax saving of up to 3,000 euros in the income tax return.

Upper level: 60% deduction for Building Rehabilitation

The highest degree of tax credit is reserved for community intervention. This deduction rewards the owners of dwellings, parking spaces and storage rooms located in buildings of predominantly residential use in which joint integral rehabilitation works are undertaken.

• Technical Requirement: Similarly to the average level, the building as a whole must reduce its non-renewable primary energy consumption by at least 30%, or achieve an overall class “A” or “B” energy rating.
• Financial Parameters and Temporality: The conditions of this level are exceptional. Although the maximum annual deduction base per taxpayer is €5,000, the legislator allows that those amounts exceeding this annual base can be carried forward to the four immediately subsequent tax years, establishing a cumulative base limit of €15,000. Applying the percentage of 60% on this maximum accumulated base, a taxpayer can achieve a staggering total tax refund of up to 9,000 euros, spread over several years. As these are works of greater logistical significance, the execution period is extended until December 31, 2027, allowing the issuance of the final certificate until January 1, 2028.

The Complementary Autonomous Community Tranche (12% deduction in the Canary Islands)

In parallel and in addition to the system of state deductions described above, the regulations of the Autonomous Community of the Canary Islands have established their own deduction of 12% of the amounts destined to energy rehabilitation works carried out specifically in the taxpayer’s main residence located in the islands.

7,000 per year, with the technical caveat that the resulting deduction applied may not exceed the equivalent of 10% of the regional tax payable by the individual in that year.

Excluded from the deduction base are those disbursements destined to furniture, household appliances, or interventions that affect non-housing annexes such as uncovered garages, gardens, swimming pools or associated sports facilities. It also prevents the double taxation of benefits by prohibiting the same amounts from being used simultaneously to justify other regional deductions in force, such as those aimed at the adaptation of housing for disabled persons or the restoration of Cultural Heritage Sites.

Rental Market: Tenants and Landlords

Fuerteventura has diversified its population profile: the traditional tourist flow has been joined by communities of digital nomads. digital nomads, highly qualified teleworking professional profiles and European residents seeking quality of life.

The Canary Islands tax legislator promotes benefits for both tenants who need access to housing and landlords who bring supply to the long term market:

Tax Advantages for the Lessee (Tenant)

The IRPF regulations in the Canary Islands protect the tenant by means of an autonomic deduction that allows him to deduct 24% of the amounts paid in the fiscal year as income for the rental of his habitual residence.

Under the general regime, the maximum amount of this deduction is set at 740 euros per year per taxpayer. However, demonstrating a clear vocation of intergenerational support, the law raises this maximum limit to 760 euros per year if the taxpayer meets any of the following age conditions: being under 40 years of age, or being equal to or older than 75 years of age.

Obtaining this tax break is subject to strict compliance with three predefined variables :

1. Economic Capacity Limit: The taxable income of the taxpayer (sum of the general and savings income) cannot exceed the limit of 46,455 euros per year in individual taxation, rising to 61,770 euros for joint tax returns.
2. Financial Effort: The total amount of lease payments made during the year must exceed 10% of the total income declared by the tenant (taxable income).
3. Formal Rigor of the Declaration: In an effort to eradicate the underground economy in the real estate sector, the Tax Agency inexcusably requires that the declarant includes in the corresponding section of the IRPF the Tax Identification Number (NIF) of the lessor, as well as the exact cadastral reference of the rented property.

Tax Incentives for the Owner (Landlord)

The Canary Islands tax system introduces exclusive deductions aimed at homeowners who place and maintain their assets in the primary residence market.

Landlords are entitled to deduct from their regional tax liability 10% of the expenses derived from the adaptation of the property to be rented, including :

• Disbursements made forrepairs, maintenance, plumbing, electricity and painting that are strictly necessary to bring the dwelling to the conditions of habitability required for its rental.
• Fees corresponding to real estate intermediaries, as well as all legal or formalization expenses derived from the drafting of lease contracts.
• The cost of annual premiums for homeowner’s insurance covering property damage, and specifically, credit insurance designed to cover possible non-payment of rent by tenants.
• Invoices derived from technical procedures for the mandatory obtaining of energy efficiency certificates.