What are the ongoing costs of owning a property in Tenerife?

What are the running costs of owning a property in Tenerife? It´s an important question and obviously if you are thinking about buying its something you must consider as running costs can vary considerably.

Here´s a quick breakdown of the ongoing costs based on a typical 1 bedroom apartment in Los Cristianos followed by a more detailed explanation for each bill.

These costs are approximations – typical amounts based on a full months usage:

• Electricity:              40€ per month
• Water:                    10€ per month
• Community fees:   100€ per month
• IBI:                         25€ per month (paid annually)
• Basura:                  10€ per month (paid twice per year)
• Insurance:             20€ per month (paid annually)
• Non-letting tax     20€ per month (paid annually)

Total:                              225€ per month  (2,700€ per year)

Electricity

Set up as a direct debit. It is usually paid every two months from your bank account and can be in the region of 40€ to 80€ per month if you are living in the property. It will vary with usage, if you are living full time and running air con 3 months of the year for example or have several computers and TV´s. But for non-residents who own a holiday home its not going to be a huge amount. The market is open here and there are many different providers and different tariffs for electricity in Tenerife.

Water

Water is set up as a direct debit and usually paid every two months from your bank account. Water bills are low in Tenerife – unless of course you have your own swimming pool. In this example you don´t – you have a 1 bed holiday home. Expect to pay 10€ to 25€ a month. It is sometimes paid to the community although it is usually metered and still varies with usage

Community fees

Community fees are set up as a direct debit and are paid every three months in many cases. A one bed apartment of average size, on a standard complex may be around 100€ per month (300€ per quarter.)

However, community fees in Tenerife can vary hugely from complex to complex depending on the kinds of facilities the complex has. From as little as 70€ or 80€ per month for a basic complex, to as much as 280€ per month for large 1 bedroom apartments in a hotel complex. These differences come about for two reasons – the size of the property and the overall features of the complex. If the property is larger and the terrace is larger, the property will have a higher co-efficient (% of the total community – one apartment can be 1% of the community for example) and therefore has higher community fees. If the complex has lots of elevators (very expensive), heated swimming pools, gated entry, 24 hour security etc then these facilities drive up the overall costs to maintain the community and thus the community fees will be higher. It´s really important to check community fees as they can vary from one year to the next. You don’t want to buy a property thinking they are 80€ a month and then find out later you are paying 220€… The most expensive community fees are to be found in apart-hotels where there is a working reception for holiday rentals and tourists coming and coming. These can be much higher than normal so you really need to check what they are before buying on a complex with this kind of community and activity.

IBI – Impuesto sobre Bienes Inmuebles (Council tax)

IBI can be set up as a direct debit and is paid once per year between the beginning of May and the middle of July. On the example apartment it could be around 280€. But it does vary depending on the type of property, location of property etc. We can usually find out the IBI amount on any property quite easily and quickly. A 1 bed in Los Cristianos would be from 160€ to 350€ per year.

Basura (garbage and sewage)

Basura can be set up as a direct debit and is usually paid in two instalments per year. An average one bed may be around 80€ in total for basura, per year and this is collected in two payments.

Insurance

Insurance on a property in Tenerife is similar to the UK in that you have buildings insurance and contents insurance. You can take out insurance for one or both of these. There are lots of different companies who offer property insurance here. Expect to pay around 200€.

Non-residents non-letting tax

The way this works (and many people do are unaware of this liability) is that for every day your property is not rented (as in not declared as being rented on your annual tax form) a small amount of tax is charged. This is calculated based on the cadastral value of the property which is usually very low. A rate of 1.1% is applied and then the tax on this amount is 19% or 24% depending on where you are resident for tax.

For example, a 250,000€ property in Los Cristianos may have a Cadastral value of 100,000€. So 100,000€ x 1.1% = 1,100€. This is then taxed at 19% or 24%, giving a tax liability of between 209€ and 264€ each year.  It is charged pro-rata for the time when your property is not rented out. So, If you declared that you rented your property for 6 months of the year, then you would pay tax on the rental income you received and then pay 50% of this tax amount.