The Real Estate Tax (IBI) is a tax that the owners of all real estate – housing, garages, premises … – have to pay every year just for having them. It is one of the main sources of income for municipalities. To raise more, many have already announced that they will upload the ibi, but its operation is cumbersome for many citizens. In this special we explain what IBI is, how it is calculated, who pays it and we solve other classic doubts about this tax
These days millions of citizens receive the dreaded receipt of the ibi. It’s about a tax almost as hated as unknown is its performance. Discover in this special how the ibi works so that you never have doubts again
Who has to pay the IBI?
The vast majority of property owners are required to pay this tax, but not all, since the law provides that some properties are exempt. Thus, those belonging to the Catholic Church constitute the exemption that has sounded most recently in the media, but the truth is that they are not a unique case. In addition to the church, there are other homeowners who are free to pay this tax. For example:
- Real estate property of the state, autonomous communities or local entities directly related to citizen security or educational services (police stations, jails or schools)
- Those of the state dedicated to the national defense
- The real estate of the red cross
- The diplomatic seats of other countries
- The listed as historical heritage
- The old buildings in big cities or those belonging to non-Catholic confessional associations legally recognized
How is the ibi calculated?
The city council of each municipality establishes, within certain margins, how much has to be paid for the properties located in its territory. At cadastral value of the property, that which reflects the value of the land on which it is located and the building, a coefficient is applied to it that varies andBetween 0.4% and 1.3% for urban real estate. For example, for a house located in Madrid capital (where for the year 2012 a tax rate of 0.581% is applied) and with a cadastral value (not real) of 79,215 euros, they would go out to pay 460 euros
The castral value of a home can be known by consulting the cadastre or by receiving the ibi that every owner receives every year.
There are important differences between the municipalities, depending for example on whether it is a provincial capital or the public services offered by the consistory
How to know the cadastral value of a home?
The cadastral value to which the city council applies the chosen percentage is calculated by the cadastre, using a series of criteria. They stand out from them:
- The location of the property
- The market value what do you consider for each house
- The material execution cost of the constructions
- The tributes that tax construction or quality
- The antiquity of the building, among others
It is a value that is much lower than the market price of the property, around half. Every 10 years, the administration must review the cadastral values of all the properties in each municipality, a valuation that is usually on the rise and that translates into increases in the amount to be paid
Are there any bonuses on the payment of this tax?
The ibi tax contemplates a series of general bonuses, as are those corresponding to subsidized housing (vpo) –They enjoy a 50% reduction during the first three years- or the rustic goods of agricultural cooperatives –Who are entitled to a 95% bonus –
In addition, each city council may establish additional discounts in its municipal regulations, such as the case of Madrid for large families
Also, some municipalities apply a discount to those domicile the payment of the receipt in the bank. Thus, in the case of the Madrid City Council, this system saves 5% of the fee to be paid. In the case of Barcelona, the savings is 2%
Upload ibi: Why do I always pay more?
Every 10 years, the municipalities must review the cadastral value of the properties that are located in their territory. Throughout 2012, it is estimated that a total of 4.2 million properties will undergo the revision of their cadastral value, making the property tax more expensive for millions of owners
In order not to make this rise as hard, some municipalities such as Madrid apply, after the revision of the cadastral values, a reduction coefficient to the new value obtained that is decreasing each year -and therefore the quota is increasing-. In this way, the “blow” is not so hard, but each year, and during the ten following after the revision, the receipt gradually rises
To all this is added a legal change that increases the value to pay for many citizens. At the end of last year, the government of Mariano Rajoy announced that the tax rate of the tax would rise during 2012 and 2013 temporarily so that the municipalities can collect more, some additional 918 million euros. This change opens the door for municipalities that carried out the last cadastral review before 2006 may charge more to higher value homes, up to 10% more depending on the year in which the city council carried out the last cadastral revision
And is that many municipalities have been more than the recommended decade without reviewing the cadastral values of the properties that are located in their territory. In fact, nearly half of the 7,591 municipalities in our country have not updated the value of the land for 18 years, so now they will be able to charge 10% more thanks to the state measure. A rise that it will be followed by a much more dramatic one and that will take place when, finally, the city council decides to review the values of the real estate in its territory. By then, they will have gone up so much since the last revision, that will imply strong increases in the receipt that the neighbors pay. An example of this situation is the one that occurred in Chiclana de la Frontera (Cádiz), who four years ago revised the cadastral value of the land in their territory for the first time since 1994. The result was that the residents had to pay an ibi receipt ten times higher than the one they had been paying up to then.
– When a house is sold, does the buyer or the seller pay the ibi?
The real estate tax for each year must be paid by the person who owns that property on January 1. If the sale occurs throughout the year, the fee must be paid by the owner of the property on the first day of each annuity
– If the house is rented, does the landlord or the tenant pay the ibi?
The city council will demand the payment of the tax to the owner of the house, but this can pass on the payment of the tax to the tenant if the lease contract so contemplates
If you have questions about this or any other topic, use our real estate office