What is IBI tax? Who pays it? Why and How
So, what is the IBI tax? How is it calculated?
IBI is an abbreviation of “Impuesto sobre Bienes Inmuebles”, literally translated as “property tax”. However, it is better explained as the Spanish equivalent of the old UK style “council tax” that is paid every year to your local town hall.
The amount of tax to be paid generally depends on:
- the build size of the property
- the classification of the land the property is built on
- the size of the plot
- the proximity to services and infrastructure
Based on the above factors, the local town hall (ayuntamiento) will assign a “valor cadastral” (taxable value), to each property in its area.
As a guideline, the “valor catastral” will probably be about 60 to 70% of the actual value of your property. These values can legally be adjusted every eight years, to allow for appreciation and depreciation.
The IBI is then calculated based on a coefficient multiplied by the “valor catastral”.
The coefficient applied varies between 0.4% and 1.3% for urban properties. There are significant differences between municipalities, depending for example on whether it is a provincial capital or the level of public services provided by that particular council.
When purchasing a property, it is essential to request a copy of IBI payments. On the IBI receipt, you can also clearly see the “valor catastral” of the property.
Who pays IBI tax and why?
If you own a property, whatever it’s condition, you should pay IBI. The monies paid go towards the upkeep of your local community, infrastructure and services
How do you pay IBI tax?
Most town halls send out written requests for IBI payments. The letters explain how, where and by what date the payments must be made. Some town halls offer discounts for prompt payment.
All town halls add surcharges for late payment.
It is important to note that whether or not you receive a payment request from your town hall, legally the responsibility lies with the property owner to pay the tax on time, each year.