What Is the IBI of a Property?
If you've ever heard this term but are unsure what the IBI of a property is, the answer is that IBI stands for "Impuesto sobre Bienes Inmuebles" (Property Tax). It is a mandatory municipal tax that all property owners in Spain must pay.
This is a direct tax levied on the ownership of residential properties, commercial premises, land, and any other registered real estate asset in the Land Registry.
The tax is collected by the local council of the municipality where the property is located, and its amount varies depending on the cadastral value and the tax rate set by each locality.
Who Has to Pay the IBI?
Understanding what the IBI of a property is also means knowing who is responsible for paying the IBI. The person liable for payment is the property owner as of January 1 of the current year. If the property is sold during the year, the seller remains responsible for paying the tax for that period unless both parties agree otherwise in the sales contract.
This tax is essential for funding public services such as street lighting, waste collection, and urban infrastructure maintenance.
What Is the Urban IBI?
Knowing what the IBI of a property is also means understanding its different types. Urban IBI applies to properties located on urban land, including homes, garages, commercial spaces, and offices. Its calculation is based on the cadastral value of the property and the tax rate determined by each local government.
How Is the IBI Calculated?
If you're not just wondering what the IBI of a property is but also how much it costs, the amount is determined by multiplying the cadastral value of the property by the tax rate established by the corresponding municipality.
The cadastral value is an administrative valuation based on the property’s location, characteristics, and the real estate market. It is periodically updated by the administration.
The tax rate is the percentage applied by each municipality to the cadastral value. It typically ranges between 0.4% and 1.3%, depending on the location.
For example, if a property has a cadastral value of €100,000 and the local government applies a 0.5% rate, the annual IBI will be €500. Additionally, some local councils offer discounts for large families, social housing, or properties with renewable energy installations.
How to Find Out the IBI Amount?
To determine how much IBI you need to pay for a property, you can check the previous year’s IBI bill. You can also visit the Land Registry's online portal to check the cadastral value or inquire at the local council for more details.
If you are in the process of buying a property, it is crucial to understand what the IBI of a property is and request the latest IBI bill from the seller to avoid unexpected costs. It's also essential to check for any outstanding debts, as they could be transferred to the new owner.
When Is the IBI Paid?
Now that you know what the IBI of a property is, let’s see when it needs to be paid. The IBI is an annual tax, and the due date varies depending on the municipality.
Most city councils set the payment period between September and November. Some cities allow for installment payments in two or more parts to facilitate payment.
Can the IBI Name Be Changed?
Understanding what the IBI of a property is also means knowing that it is linked to the ownership registered in the Land Registry, making the registered owner responsible for the payment.
However, in rental agreements, it is possible to negotiate that the tenant assumes the IBI payment, although legally, it remains the owner’s obligation. This arrangement must be specified in the rental contract.
Who Pays the IBI When Selling a Property?
The IBI is payable by the property owner as of January 1 of the current year. If a property is sold in March, for example, the seller is responsible for paying the full IBI for that year unless they agree on a different arrangement with the buyer.
It is advisable, now that you understand what the IBI of a property is, to include a clause in the purchase contract specifying how the IBI payment will be divided to prevent misunderstandings.
Can the IBI Be Deducted on the Income Tax Return?
Knowing what the IBI of a property is also means being aware of potential tax deductions.
For most taxpayers, the IBI is not deductible in the Personal Income Tax (IRPF) if the property is used as a primary residence. However, self-employed individuals who work from home may deduct part of the IBI as a business expense.
Some municipalities also offer tax deductions for rental properties or energy-efficient home improvements.
Conclusion
Now that you know what the IBI of a property is, you understand that it is a key tax for property owners in Spain. Knowing how it is calculated, who must pay it, and the available tax benefits can help you optimize your finances and manage property expenses efficiently.
Before buying or selling a home, make sure you check all IBI-related information to avoid unexpected costs and ensure a smooth real estate transaction.
If you need expert advice on what the IBI of a property is, real estate taxes, or are looking to buy or sell a home, our team at Hoffmann Real Estate is ready to help. Contact us today to optimize your property management!
