Once you become the owner of a home, you are already obliged to pay a series of expenses and taxes associated with it, and the Real Estate Tax or IBI, as it is commonly known, is one of them.
All property, regardless of its type and nature (a flat, a house, a garage, a storage room, a commercial premises, a rustic property, etc.) must be registered in the General Directorate of the Cadastre and, therefore, pay the corresponding IBI . The amount, the terms, the form of payment and the collection procedure are determined by the municipalities, which is why it varies depending on the city.
So, if you are a recent owner or you are about to acquire a home, and you have doubts about how this tax is calculated, who is obliged to pay it in a sale and the tax rebates or benefits that exist,
What is the Real Estate Tax or IBI ?
The IBI is a direct tax that taxes the ownership and other real rights of real estate belonging to a municipal area, whether rustic, urban or with special characteristics. It is mainly regulated in the Local Treasury Law 2/2004 of March 5, in its articles 60 to 77.
This tax is collected annually by the municipalities to anyone who owns a property, simply for its mere possession. In fact, the Property Tax is one of the ways through which local administrations receive the highest income. Although some municipalities can delegate their collection to other entities for different reasons.
Properties exempt from paying IBI
In theory, all properties are required to pay IBI, but there are exceptions . The Local Treasury Law establishes that the following are exempt:
- The real estate of the State, of the CC. AA. and local entities.
- The assets of the Church and those of recognized non-Catholic associations.
- Diplomatic buildings and official organizations, if there is reciprocity.
- The local mountains and communal property.
- Monuments declared historical heritage.
- The land occupied by railway lines, stations and warehouses for their service.
How is the Real Estate Tax or IBI calculated ?
The IBI is calculated by applying a coefficient that each council decides on the cadastral value of the property.
The cadastral value is determined by the Real Estate Registry, which is a public registry dependent on the Ministry of Finance in which the characteristics, boundaries, surface, etc., of all the properties in Spanish territory appear. This registry is a separate body from the property registries.
In the Cadastre, each property is assigned a cadastral reference to be able to identify it and based on a series of what is called “value statement”, it is also given a minimum fiscal value for administrative purposes. The cadastral value has nothing to do with the market value or the appraised value of the property.
According to the Law, the cadastral value of a property will depend on:
- Your location.
- The value of land and construction in the market.
- The urban characteristics of the land.
- The material cost of constructions.
- The age of the building.
Each council applies a percentage to this taxable base, which is the cadastral value, in order to calculate the amount of the IBI receipt. This percentage or coefficient is decided by the city council, but the Ministry of Finance in the Law establishes a minimum and a maximum.
For urban properties, the coefficient can range between a minimum of 0.4% and a maximum of 1.1%. For rustics, the percentage can be between 0.3% minimum and 0.9% maximum.
However, the Law allows municipalities to increase these rates in the following cases:
- In capital municipalities of the province or autonomous community: 0.07% in urban goods and 0.06% in rural goods.
- In municipalities where surface public transport services are provided: 0.07% in urban goods and 0.05% in rural goods.
- In municipalities where city councils provide more services than they are required to: 0.06% in urban goods and 0.06% in rural goods.
- In municipalities in which rustic goods represent more than 80% of the total area: 0.15% in rustic goods.
When do you have to pay the IBI ?
There is no regulation that establishes with what terms and terms the Property Tax is settled, each city council establishes it at its convenience. For this reason, at Gilmar we always recommend that new owners consult the town hall in question with any questions regarding this, since, if the IBI is not paid in the voluntary period, they may suffer surcharges, interest and even seizures in extreme cases of non-payment.
In any case, to avoid this, the payment of this tax can be made by direct debit. Some municipalities offer bonuses to those who domicile the IBI payment or pay it in advance.
Real Estate Tax Bonuses
The discounts are applied once the tax rate has been calculated. Some of them are established in the Local Treasury Law and others are the power of the municipalities. Although these must not exceed the limits set by the Law and be regulated in accordance with it.
The discounts that are in force are regulated in articles 73 and 74 of the Local Treasury Law, and are the following:
- 50% discount for the first three years for officially protected housing (VPO).
- For large families, discount of up to 90% of the full fee.
- Bonus of up to 50% for properties with solar energy systems
- For rustic goods of agricultural cooperatives or community exploitation, discount of 95% of the fee.
- Bonus of up to 95% for real estate intended for economic activities of special interest or municipal utility.
- Bonus between 50- and 90% during the 3 years prior to the start of the real estate development works.
- For real estate with special characteristics, discount of up to 90%.
Who pays the IBI on sales?
One of the most common questions is who pays the Real Estate Tax after a sale.
According to the Law, it must be paid by the person who appears as the owner of the property on January 1, regardless of whether the property is sold the following day. However, there are rulings that gave reason to those who claimed the new owner the payment of the proportional part.