Property tax in Spain (IBI): how it works, calculation and advice
Property tax in Spain (IBI): how it works, calculation and advice
Introduction
When you buy a property in Spain, you become liable for a local tax called IBI (Impuesto sobre Bienes Inmuebles). This is the equivalent of French property tax and is levied each year by the local council where the property is located. It is an unavoidable charge for all property owners.
1. What is IBI?
IBI is a municipal tax paid by all owners of property in Spain, whether resident or non-resident. It applies to houses, flats, land and commercial premises. The funds collected are used to finance local public services such as road maintenance, lighting and municipal infrastructure.
2. Who has to pay IBI?
Payment of the IBI is the responsibility of the official owner of the property as recorded in the Spanish land register (Registro de la Propiedad). In the event of a sale, the owner on 1 January of the year is generally the person liable to pay the tax.
3. How is property tax calculated in Spain?
IBI is calculated on the basis of the cadastral value (valor catastral) of the property. This value is set by the Spanish land registry and takes into account various criteria:
- The location of the property (town, district, proximity to services).
- The characteristics of the property (surface area, condition, age).
- The use of the property (residential, commercial, bare land).
The rate applied depends on each municipality, but generally varies between 0.4% and 1.3% of the cadastral value.
4. Calculation example
Let's take a flat located in Valencia, with a cadastral value of €120,000 and a municipal rate of 0.9%:
- Taxable base: €120,000
- Rate: 0.9%
- Amount of IBI: €1,080 per year
Each year, the local council sends out a tax notice indicating the amount due and the deadline for payment.
5. When and how is IBI paid?
IBI is paid once a year, at a time that varies from municipality to municipality. Payment can be made:
- By direct debit from a Spanish bank account.
- Directly at the Town Hall counter or via a partner bank.
- Online, via the municipal platform.
It is strongly recommended that you set up a direct debit to avoid oversights and penalties.
6. Differences with property tax in France
Compared with France, Spanish property tax is often lower, but it depends very much on the location of the property. Some large cities such as Madrid or Barcelona apply higher rates than rural areas or small municipalities.
7. Penalties for non-payment
Late or non-payment will result in a surcharge. The local council may apply penalties and, as a last resort, initiate seizure proceedings against the property.
8. Practical advice
To manage IBI properly:
- Ask your lawyer or property manager to check the cadastral value at the time of purchase.
- Include this annual cost in your overall budget.
- Opt for direct debit to avoid any delays.
- Compare the cadastral value with the purchase price: it may be lower, which reduces the tax burden.
Conclusion
Spanish property tax (IBI) is an annual obligation for all property owners. Although the amount is generally reasonable compared with other European countries, it's important to plan ahead and pay it on time. A good understanding of how this works will enable you to manage your property investment in Spain effectively.
