What is the IBI property tax and why is it important?
The IBI property tax is a compulsory tax for all property owners in Spain and is collected by the municipality. The amount of the tax is determined by the valor catastral, a value of the property set by the government. This value is usually lower than the market value and is revised periodically. As each municipality has its own tax rates, the amount can vary depending on the location. At Royal Estates, we always advise our clients to include the IBI cost in their financial planning when buying a property in Spain.
How is the IBI property tax calculated and paid?
The amount of IBI property tax is calculated based on the valor catastral and the municipal tax rate, which is usually between 0.4% and 1.3%. The higher the value, the higher the tax. Payment can be made annually by direct debit, online or directly at the municipal office. As councils have different deadlines, it is important to keep a close eye on them. At Royal Estates, we always remind our clients to pay their IBI on time to avoid penalties and interest. Failure to pay can even lead to a repossession of the property in extreme cases.
Who is responsible for paying the IBI property tax?
The owner of a property on 1 January of the tax year is responsible for paying the IBI. If a property is sold during the year, the tax liability usually remains with the seller, unless otherwise agreed in the purchase deed. In practice, the tax is often split proportionally between buyer and seller. At Royal Estates, we always check property transactions to ensure that the current year’s IBI has been paid, so clients do not face unexpected costs.
Exemptions and discounts from IBI property tax
Some property owners may be eligible for a discount or exemption from IBI property tax. For example, municipalities offer discounts for large families, pensioners or low-income owners. In addition, certain properties, such as historical buildings or non-profit organisations, may be completely exempted. In some cases, homeowners get a discount if they pay their IBI early and in one lump sum. At Royal Estates, we advise clients to always check with the municipality for opportunities to save on IBI.
Conclusion
The IBI property tax is an important tax for property owners in Spain and plays a crucial role in financing municipal services. The amount of the tax is determined by the valor catastral and municipal rates, which can vary greatly by region. Paying on time prevents fines and legal problems, and in some cases discounts or exemptions are possible. At Royal Estates, we make sure our clients are well informed about their tax obligations so they can enjoy their property in Spain worry-free. Do you have questions about IBI or want to know more about buying a property in Spain? Our team is ready to help you!
