The Canaries' home tax break: who can really deduct, how much — and the 2013 trap

It is one of those pieces of news that spreads fast and gets dangerously truncated along the way: «in the Canaries you can now deduct your mortgage.» Any newly minted homebuyer hoping for a hefty tax refund on that basis may be disappointed. Because the truth is more nuanced — and that is exactly why a close look pays off, especially for foreign residents who own, or want to buy, property here.

What the Canaries actually offer

Like every Spanish region, the Canaries have their own leeway within income tax (IRPF). The archipelago uses this «regional portion» for a whole series of housing deductions that apply on top of the state ones. The most important is the «deduction for investment in your main home» (deducción por inversión en vivienda habitual). It lets you deduct a percentage of the amounts paid for the home during the year from your tax — and those amounts expressly include mortgage principal, interest and hedging costs. Hence the impression that you can «deduct the mortgage».

The rates, for tax year 2025: 5 percent if income (the sum of the general and savings tax base) is under €26,035, and 3.5 percent for income between €26,035 and €46,455. For taxpayers under 40, the rates rise to 5.5 and 4 percent respectively. The base is capped at €6,000 per person per year.

The 2013 trap

And here is the decisive catch the truncated headlines leave out: this general deduction only applies to homes that already qualified under the state rules as of 31 December 2012. In plain terms, in the vast majority of cases that means the home must have been bought before 2013. Anyone who acquired property only after that generally cannot claim this general deduction.

This is not a Canarian quirk but the consequence of a nationwide reform: Spain abolished the general home-purchase relief at the end of 2012 and left only grandfathering for existing cases. The Canaries carried that grandfathering into their regional rules. For long-standing owners who bought their home over a decade ago and are still paying it off, this is real money. For new buyers, it is unfortunately a door that usually stays shut.

What new buyers can still use

Yet those who bought after 2013 do not necessarily come away empty-handed — there are several targeted deductions that apply regardless of the 2013 cut-off:

One important special case concerns La Palma: those who lost their home in the volcanic eruption do not lose the deductions already applied and can keep deducting for later payments.

The ground rules

For the tax office to play along, several conditions apply. The home must genuinely be your main residence, and you must live in it for at least three years (for a new build: move in within twelve months of purchase). Move out earlier and the entitlement lapses retroactively. Payments must also be traceable electronically — by transfer, card or cheque, not in cash. Public subsidies that help finance the purchase reduce the base.

There was, in fact, a general improvement for 2025: the Canarian budget law of December 2024 raised numerous deductions and eased income limits. That is probably the source of the «new tax relief» narrative — but it concerns a general top-up of existing deductions, not a brand-new mortgage relief for everyone.

The bottom line for owners

So the shorthand «deduct your mortgage in the Canaries» is half right and half misleading. The true part: those who bought before 2013 can claim a decent share of their ongoing mortgage costs through the investment deduction — up to 5.5 percent of a maximum €6,000 base. The misleading part is the impression that this applies to everyone. For purchases from 2013 on, the route runs through the more specific deductions for the young, families or renovations.

As always with tax matters: this overview is no substitute for advice. Its main aim is to clear up a widespread misconception — and to show that the decisive question is not «Canaries, yes or no» but «bought before or after 2013, and what is your situation».