Property Transfer Tax (ITP) revenue in the Canary Islands reached €304 million by October 2025. The 11,6% price increase and sales volume marked a record year. The Canary Islands real estate market is undergoing significant legal and fiscal restructuring, reflected in the figures for the end of 2025. Amidst the debate surrounding the new Holiday Home Law, revenue data up to October reveals that Property Transfer Tax (ITP) reached €304,8 million, 9,41% more than the previous year. This increase is not only due to the volume of transactions but also to an unstoppable price surge: in the Islands, the Housing Price Index (HPI) registered an annual rate of 11,6%, making each transaction more expensive and, consequently, increasing the tax burden.
The most revealing aspect of this period is the behavior of notarial documents. Faced with regulatory uncertainty, a massive movement of property owners seeking to "protect" or reorganize their assets has been detected. In October, revenue from segregation transactions skyrocketed by 161,5%, while consolidations grew by 146,7% and horizontal divisions by 58,1%. These procedures are essential preliminary steps for fragmenting properties or specializing the use of buildings, suggesting that the sector is rapidly adapting its deeds to fit the new legal framework for the accommodation sector.
Meanwhile, the Stamp Duty (Impuesto de Actos Jurídicos Documentados - AJD) is also showing unusual strength, with a cumulative growth of 22,2%. This surge is primarily driven by mortgage lending and the transfer of commercial premises and other buildings, which grew by 34,2% year-on-year. Investors appear to be diversifying their portfolios beyond traditional housing, seeking an alternative in commercial premises given the regulatory pressure on the residential market in high-demand areas of the archipelago.
At the opposite end of the spectrum is the Inheritance and Gift Tax (ISD), whose revenue has plummeted by 46,5% year-on-year compared to 2024. This collapse is not due to a lack of activity, but rather to the direct effect of the 99,9% tax break reinstated by the Canary Islands Government. While the construction sector is generating record revenue for public coffers through consumption and investment, inheritance tax has become practically negligible, leaving real estate sales and urban development as the driving force of the Canary Islands' economy.
