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What is the IBI Tax and How is it Calculated ?

- Updated: 23/09/2011
What is the IBI Tax and How is it Calculated ?

IBI - What is it ?

IBI (Impuesto sobre bienes inmuebles urbana / rustica) is a tax that is payable by the owners of all Spanish properties - regardless of their residential status.

The request for payment usually comes in the the form of a letter, or statement sent in the post between June and August of every year, and allows a window of around 6 weeks when payment can be made. Payment can still be made after that time, but a penalty charge will be applied and can be between 10 to 20%.

What is it for ?

The tax is payable to your local Town Hall, although in some areas it may be a third party who acts on behalf of the Town Hall who sends the letter.

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The taxes go towards the upkeep of your community and infrastructure costs etc... and are similar to council taxes in the UK.

Note : A small minority of Town Halls do not send out written requests for payment. Legally, the responsibility lies with the owner to pay this tax, and as such you should ask your neighbours if yours is such a municipality. If this is the case you should take your escritura to the town hall and ask how much you owe them. Even if your Town Hall sent a bill last year, do not assume that this will always be the case - some Town Halls take advantage of this ruling by 'forgetting' to send out an IBI bill to catch out non-residents and apply the late penalty as means of increasing revenues.

Where can I pay it ?

The IBI Bill that you receive will advise you of how, where, and by what date you should make the payment. There are usually a number of Banks given where you can make the payment over the counter whether you are an account holder with the bank or not. The Bank will then stamp the letter to show receipt of payment.

Certain Town Halls, or collection agencies may make provision for payment of the tax online.

How is the Tax Calculated ?

The IBI is based on the 'Valor Catastral', or the rateable value of the property, which may bear little resemblance to what you believe the property to be worth, or what you actually paid for the property. The Valor Catastral is usually around 70% of the market value of your property.

However, this figure can be legally adjusted every eight years to allow for extra taxes to be accrued through appreciation in the value of the property.

Due to the sorry state of the finances of many Town Halls, many property owners have seen huge increases in the IBI they have been paying due to the authorities re-estimating the Valor Catastral.

Each Town hall works to a list of 'property values' (Ponencia de Valores) in determining the value of your property, and this value should take into account a number of factors : Rural or Urbanised land, Type of Property, Square meter age of Land and Build, Proximity to services, Infrastructure etc... are just some of them, although each Town Hall places a slightly different importance on each criteria.

Once the 'Valor Catastral' has been decided it will applied with the basic rate of around 0.3% for Rustic property and 0.5% for Agricultural (Figures can change very slightly from region to region). Towns over and above 5'000 residents can also levy a higher rate due to the additional facilities and infrastructure they usually provide.

What to check before buying a Property

You should ask to see the most recent IBI bills to check A.) That the payments have been made. The new owner is strictly responsible for outstanding payments, however all Abogados are supposed to check for this. If the payments have not been made then, as the new owner you can legally reclaim them from the vendor, but it is obviously better to avoid this headache if you can, and, B.) What the actual Valor Catastral is. If the payment seems quite low, then it may be wise to allow for and expect a sudden increase in the near future.

After buying a property

Check that your Abogado has registered your property with the Town Hall. If has has not, take along your Escritura and Passport or Residencia and register it. You have two months to do this before a fine may be applied for your not doing so.

The National Institute of Statistics recently estimated that over the last decade as many as 10'000 properties were unregistered with their local Ayuntamiento, due to their being either unoccupied or a ruin, however, Taxes and the resulting penalties - plus interest - were still applied and charged once the rightful owners were found.

There is a statute of limitations allowing a Town Hall 5 years to recover unpaid IBI Taxes and take legal action against property owners, so if you have not paid in recent years do not simply assume that you have got away with it !

If your property is empty ....

The tax will still apply! As opposed to having a discount applied like in the UK, certain municipalities may actually apply a surcharge. This is essentially to encourage property owners to open up their property to the rental market.

Likewise, if your property is a ruin this will also still apply, however, the IBI applied to such a property is unlikely to be great - especially if rustic.

If you disagree with your Valor Catastral

The first thing that you should do is check all documentation that both you and the town hall hold regarding your property and agree that you are referring to the same property. Mistakes can and do happen often, and this is something that is particularly common with regards to rustic property. Under these circumstances you should ensure that the Town Hall undertake to rectify the situation and send you a correct tax statement.

If you just believe that your bill is too high, or does not compare with any of your neighbours then you have 15 days from receiving the bill in which to appeal and ask for a revaluation.

Comment on this Article

 
All very interesting. We own a plot of land property in the area of Camp De Mar, Mallorca. The IBI untill approximatly three years ago was under €100 Euros but has over the last three years jumped to €400 then €600 then this year €1,077 this all now seems very high, it is only this year they have started to carry street works including the main sewer make pipe. when finished it will make our plot builderble so we can have a licence promissed 10 years ago. On buying the land 10 years ago our solicitor and estate agent mislead us then we had a different solicitor who was billing us for meetings that had not occurred so at present we don’t have a solicitor to fight for us. During this time I understand that the Mayor and four top assistants were all arrested on corruption charges, there is now a new system for obtaining a building licence although this can only happen when works are complete. In addition to IBI tax We have payed €32,000 as our part of the street works finance.
Dronsy - Sat 1st Nov 2014
We own a property in the region of Manacor, Mallorca. We normally pay our taxes (IBI and Basura) in Sept/October, although we have never seen an invoice. Are the taxes paid in advance or arrears and from what month do they relate from, We have just sold our property, and want to make sure that we do not pay too much !!!! Thanks
Susan Evans - Wed 24th Sep 2014
We have been in dispute with our town hall for years over the amount they charge us for the IBI (over 3,000€ pa) and recently they have sent us a letter with a demand for all the outstanding payments including those going back more than 5 years, otherwise they will put the house up for auction. We live in a small village which mostly comprises illegal buildings (ours is one of the few that is legal), has no services or infrastructure and I am sure no one else pays IBI as they stole the land and built their illegal homes and have got away with it. Our lawyer told us that they calculated the amount based on the size of the land alone and not the house (the land is 12,500sqm and the house 240 sqm). Can they actually put the house up for auction and ask for outstanding payments more than 5 years old? Thank you
Al - Mon 30th Jun 2014
Linda : Fair or not, it is legally the responsibility of the property owner to pay their IBI bill each year REGARDLESS of whether they receive a bill or not, so your complaints to the Town Hall are likely to fall on stoney ground. This issue is and could be something that the President of your Community of Residents (if you have one) should really be getting involved with !
Tumbit - Admin - Tue 24th Jun 2014
This is a large urbanization in Mazarron Murcia. Some property owners, although having signed their Deeds 7 0r 8 years ago are only now receiving IBI bills asking for the back years. Previously we were told that they could only ask for 4 years of back charges - was that the then statute of limitations, which now would seem to be 5 years? Also we were told that as this late charge was not the fault of the owners payments by installments for the earlier years could be made interest free. It seems that now this is not the case and interest is being charged. Thank you
Linda Biggs - Tue 24th Jun 2014
Phill : There are a number of circumstances in which you can ask for a reduction - and this isn't one that I have heard of ! (Can't hurt for you to speak with your Ayuntamiento, though....)
Tumbit - Admin - Mon 31st Mar 2014
Our house was broken into and everything taken including windows, water pipes, gas pipes, all. We have written to council asking for reduction in IBI. No reply. Are we entitled to a reduction as house is now uninhabitable and we will not be fixing it up as this is the second time it's happened and we cannot even insure it now. If council does not respond what can we do?
Phill - Mon 31st Mar 2014

P Williams : 1) No; 2) No; 3) Yes

Yes, you can pay ahead of the sale of your property. The best approach would be to speak directly with your local Town Hall, however in some areas (such as Alicante) the collection of such taxes are outsourced to "SUMA", who you should approach, and who make provision for payment online (In English).

Tumbit - Admin - Wed 26th Mar 2014

Thank you for answering my question about Spanish IBI tax. Many rumours seem to exist regarding taxes in Spain :

1.Property under 100.000 is exempt ?

2.If you are a pensioner you are exempt ?

3.You do not have to pay more than 5 years back tax.

Are any of these correct ? Can we pay the tax before the purchase is finalised ? If so how do we find out how much we need to pay ? Where can we pay ? Can we pay on line, as we are in England? Our house is selling for 60.000 euro.

Thank you !

P Williams - Wed 26th Mar 2014
P Williams : Any outstanding IBI payments will be deducted from the proceeds of the sale of your property by your Solicitor - minus interest and penalties, however, these are not usually too significant under the circumstance. Basically, you don't have to do anything other than accept the fact that this sum will be taken from you automatically when you sell the property.
Tumbit - Admin - Tue 25th Mar 2014
We have owned a property in Andalucia for 9 years. We have residencia of the village but not of Spain. We are selling the property, and the solicitor as asked for a copy of IBI for 2013. As far as we are aware we have never paid this. What should we do? We are selling the property for less than we paid for it. We do not live in Spain. Thank you
P Williams - Mon 24th Mar 2014
Hello We have a property on Fuerteventura which we have owned for 10 years. As house prices rose so did the IBI. However, the values have now collapsed and are less than at purchase. However, the IBI has not decreased and in fact this year they are rising 20% following previous annual increases of between 8-12%. Do we have any grounds for appeal and if so how or to whom. Hoping that you can advise. Many thanks.
John - Mon 6th May 2013
The Bill is taken at the end of the year, so as the person occupying the property for that period it should be paid by you. This should all be sorted and taken into account by your buyer's solicitor when they finalise the purchase of the property.
Tyler - Fri 22th Mar 2013
I am hoping to have sold my property by June 2013. My IBI will be due in July / Aug. Does this refer to the previous year-2012 or is it for this year 2013 ? Who should be paying this as I will no longer be in Spain.
Jean - Fri 22th Mar 2013
Patricia : many Town Halls work differently when it comes to what they charge and how, but I would expect that you are paying for a combination of the IBI and Basura.
Robster - Sun 3rd Feb 2013
We have a proerty in Mallorca which we purchased in 1987 of which we are non residence. I pay though direct debit three taxes to our council Lluchmajor Mallorca. Would one of these be the IBI I have never received a bill from the council for this ? If I am not paying how far can they go back ?
Patricia Heron - Sun 3rd Feb 2013

A tough one, and I would suggest that you spoke directly with the Lawyer who originally handled the sale for you.

My instinct here is that the vendor's lawyers could and should have picked up on the issue of this being unpaid, as this is largely what the withheld portion of the proceeds of the sale are for.

The other thing here is that the statute of limitations for claiming unpaid taxes in Spain is 4 years.

Tumbit - Admin - Sun 30th Oct 2011
Have just received email from our vendors from 2007 requesting contribution to 2007 IBI bill they have just received 2011. Are we liable?
A Hallyburton - Sun 30th Oct 2011
Stuart : The IBI is payable at the same rates regardless of what you actually do with the property, however, the income that you may make from renting the property out is taxed as a seperate issue. If this is the case with yourself you may like to take a quick look at this article on the subject by clicking the link HERE.
Tumbit - Admin - Tue 27th Sep 2011
Is there any difference in the rate of IBI to be paid, if the owner chooses to rent out the property. Or is this covered by somthing else.
Stuart Taylor - Tue 27th Sep 2011