One of the questions that most afflicts the owners of a property is: what is the IBI? Better known in Spain as Real Estate Tax, this is a tax that must be paid by the owner of all real estate properties he owe. In this way, the payment of the IBI is a legal and tax commitment that you acquire from the first day in which you figure as owner in the Property Registry. But ... what else should you know about this tax? We tell you bellow so you do not miss anything!

When and how is the IBI payment made?

The IBI is a municipal tax and, therefore, each municipality has the partial power to set the corresponding value; nevertheless, it is the State that establishes the margins according to the cadastral value of the property. To calculate the IBI, you must consider the values ​​defined in each municipality, in accordance with government ordinances.

The payment of this tax is made annually, and its payment period depends on the Autonomous Community and the nature of the property. For example, in Valencia the term is between March1 and April 30 for urban real estate; while in Madrid the payment must be made between October 1 and November 30.

It is important that tenants residing in a rental dwelling should not cover this tax, unless thelease has been established otherwise.

What factors affect the cadastral value?

When it comes to the IBI, the main determining factor of the total amount to be paid will be the cadastral value; that is, the sum between the value of the land on which a property is built and the total value of the building. Therefore, each property has a different cadastral value.

However, we must also bear in mind that there are factors that will affect this cadastral value and that should not be overlooked: the market value, the location of the property, the price of the materials used in the construction or the seniority period ... they are just some of them.

Lastly, do not forget that the cadastral value is updated every 10 years, so the amount to be paid as IBI will also suffer long-term changes.

What properties that do not pay IBI?

There are some real estate types that are exempt from paying this tax. For example, the following:

• Properties owned by the State.
• Properties owned by the Autonomous Communities.
• Properties whose use is social (education, health, food ...).
• Properties used by Foreign Governments or official entities.
• Properties owned by the Catholic Church.

The calculation of the IBI is made from January 1 of each fiscal year. So, if you plan to sell your property mid-year, keep in mind that you should cover the payment as a seller.

Do you have more questions regarding Real Estate Tax? In Proyectos Insulares, we offer a comprehensive real estate counseling service through our team of experts, to help you with this and other issues that may arise. Do not hesitate to contact us!