The Spanish tax system is based on several pillars. One of them is the Real Estate Tax, which, simply put, taxes the ownership of a home or a rustic land. It is municipal although part of its characteristics are regulated by the Ministry of Finance. In fact, it is the Cadastre that has the power to classify these assets and document who their owners are.
On the other hand, it is not always easy for ordinary citizens to understand why we have to pay a tax annually for a property that has already earned taxes when it was purchased. Therefore, it is interesting to make a description of this tribute.
What Is the IBI Tax? General Characteristics
is a direct tax that is paid to the municipalities according to a classification prepared by the Cadastre. It taxes “rights in rem and title” in immovable property.
In this sense, it is necessary to differentiate the urban IBI,when it is a house or apartment settled in a city, and the rustic, when the property is in a rural area (either a house or a land). There is also an IBI on goods with special characteristics, which are those of a complex nature and special use such as highways or power plants.
Also, there are properties that are exempt from the tax. Among them, those that are owned by the State and necessary for the stability of the country, those of religious institutions, social aid agencies, monuments and embassies.
On the other hand, the Real Estate Tax is annual and, consequently with all that has been said, all persons, whether natural or legal, who own the constituent property of taxation are taxable persons (that is, taxpayers).
How the IBI Is Calculated: How to Find the Tax Quota
It is also necessary to explain how the amount that taxpayers must pay is. But, before doing so and already explained the concept of taxable person, it is also necessary to define some terms.
It is called “taxable event” to the same ownership of the properties, whether these are urban, of special characteristics or rustic. For its part, it is called “cadastral value” to the economic amount in which this body rates the real estate based on objective data.
To calculate the cadastral value of your home, you take into account what both the land where it is located and the building itself are worth and can never exceed the market value of it. It is important to be very clear about this concept because it is basic when calculating the Real Estate Tax, since it constitutes the “taxable base” or amount on which the tax is applied.
On the other hand, it is called “tax rate” to the rate in the form of a coefficient that is applied to the “taxable base” (fruit of the reduction of the taxable) to result in the “tax quota” or amount that the taxpayer must pay.
Clarified these terms and although you can find some IBI simulator on the Internet, we go on to explain how the tax is calculated.
Based on a series of characteristics such as the location of the property, its age, the quality of the construction or its market price, the Cadastre marks the aforementioned cadastral value. An amount that, by the way, is reviewed every ten years.
On it, each municipality applies a coefficient or percentage fixed by it in advance. And the result is the amount to be paid by the taxpayer.
These coefficients range from 0.4% to 1.3% and that amount to be paid, in certain cases, is subject to bonuses or surcharges. Among the first, the one enjoyed by social housing during the first three years stands out, which is 50%. On the other hand, the latter are usually applied to unoccupied homes.
When the IBI Is Paid
As with other taxes, the IBI tax is annual,but has specific settlement dates. Therefore, the accrual, or accounting principle by which the expense is born, occurs on the first day of January, the first day of the calendar year. However, payment is made on another date.
As it was said, the Real Estate Tax is municipal. Consequently, each municipality sets the dates on which the tax must be settled according to its collection convenience.
In conclusion and by way of summary, we will say that the IBI taxes the ownership of an asset of a real estate nature, whether it is a flat, a house or a rustic land.
The IBI is calculated by applying coefficients (previously set by the municipalities) to the cadastral value of the property and, sometimes, the resulting amount is subject to a bonus or surcharge. As for the payment dates, it is each municipality that marks them. They, obviously, influence the collection needs of each municipality.