Property taxes in Spain, called Impuesto sobre Bienes Inmeubles Urban / Rústica or simply IBI, is a local tax, similar to council tax or rates in the UK.
It is applied to the owners residents and non-residents and is used for local services, such as roads and cleaning the beach, educational, cultural and sports facilities and ‘administration.
IBI is applied on commercial and residential property, but if you rent premises, the owner should pay for you, so check that it is specified in your lease.
You should also check when you’re buying local property or business. If there are unpaid taxes, you, as a new owner, will become responsible for them. Note, however, that it is now mandatory for the seller to keep the last IBI receipt, proving that the taxes have been paid and up to date.
When you buy a property, you must register the property at the local town hall within two months of signing the contract and you can be fined if this is not done.
Local authorities have become hard with those who do not register because, until recently, were losing a tremendous amount of potential revenue from properties not declared and taxed.
L ‘IBI is based on what is called the cadastral value, which is similar to a taxable value and is usually about 70% of the market value, but this varies greatly with the’ local authority.
The value is calculated based on the size and the overall evaluation of the property (if it is considered a luxury, normal or simple) and it is close to services, amenities and roads.
Rates are generally higher in coastal and resort than those of hinterland, as the services are better.
The rate of tax is usually 0.5% of the cadastral value for the urban properties and 0.3% for agricultural property, but make sure you check it, because the rates are set locally and can vary considerably depending on the expense of the local government.
Pay a visit to your local town hall to find out what you should pay and when. Some send bills, but many do not, and it is your responsibility to ensure that this tax is paid by the due date.
It is prudent to set up a Direct Debit and authorize the bank to pay the tax when it is required so as not to be caught off guard.
If not paid on time, you will apply surcharges: usually between 10 and 20%, plus interest and expenses of collection, according to the delay in payment. Some municipalities have a system of discounts to encourage residents to pay bills early.
Payment dates vary according to the city council, but usually you have two months to pay a bill. If you have not established any direct debit, you can usually make a cash payment to the tax office, although sometimes you can also pay by bank transfer or by credit card. Controlled methods of payment are allowed before going.