Recent local press articles claim that an increase in the cadastral value of Las Palmas and Gran Canaria property means a big jump in tax. However, a closer look reveals that the change will NOT affect the vast majority of property owners.
The Spanish government has its own system of valuing every property in Spain for tax purposes. This value is called the “valor catastral”. It can be used to calculate the amount of ‘Impuesto de Transmisiones Patrimoniales’ and ‘Actos Jurídicos Documentados’ tax paid when you buy a property in Gran Canaria. Spain has increased the cadastral value by 40% as of January 1st, 2022.
However, the valor catastral has always been significantly under the market value of property in Gran Canaria. Even with the 40% increase cadastral values are below the market price of Gran Canaria property.
Since the tax authorities always use the highest value (chosen from the cadastral, market price, or mortgage valuation) when calculating the amount of tax due, the rise is irrelevant to almost all property buyers in Las Palmas and Gran Canaria.
The only situation when the increase in cadastral value affects buyers is if you buy a property for a rock-bottom price.
In this case, the increase in ITP and AJD taxes is an indication that you just bought a bargain which will go a long way to easing the pain of paying extra tax.