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11th of September 2023
Unbeknownst to most non-resident property owners, on buying property in Spain, you automatically become liable to pay IBI and rubbish tax on the following year. No one will give you the heads-up on these taxes, so it is up to you to find out how much you owe and comply with the Spanish Tax Authorities.
IBI tax is of crucial importance because it has associated a valuation for tax purposes of your home known as 'cadastral value' (valor catastral, in Spanish) which is used as the benchmark to calculate any, and all, property-related taxes.
IBI Tax - Definition
The Impuesto sobre Bienes Inmuebles (IBI, for short) is a tax that applies to both residents and non-residents. In some parts of Spain it is known as SUMA. All property owners must pay this tax every year.
This is a local tax levied by the town hall where your property is located. It is paid once a year (normally due in August through to November). This is Spain’s equivalent of the United Kingdom’s Council Tax. It varies from one town hall to the next. It is based on the rateable value of your property (0.4 – 1.1% of cadastral value per annum); for cheap properties (think rural land) it can be as low as a few euros whereas posh pads, in sought-after prime locations such as Marbella and Mallorca, command several thousand euros/year.
Cadastral Value - Definition
Is the assessed value local Tax Authorities give to a property. It is usually well below the market value. This rateable value is used as the taxable base to calculate a series of taxes. You will find the cadastral value of your property in one of your local tax bills (i.e. IBI). Be aware that a storage room or parking may be regarded legally as a distinct separate entity from your main home and therefore subject to their own individual cadastral values. A cadastral value, in general terms, is 30 to 40% below the current market price of a property. So, it does not equate to a property's true market value, it is actually well below it (which is good news).
When are these taxes due?
Town halls are empowered to rule on this, so it varies. Normally, it is payable once a year, typically from August through to September.
Whoever owns the property on the 1st of January is liable to pay these taxes, by law.
Severe consequences of non-payment of IBI tax
Larraín Nesbitt Abogados can assist you domiciling both taxes wherever your property is located in Spain. Give us a call.
We offer this service:
At Larrain Nesbitt Abogados (LNA) we have over 20 years’ experience assisting clients buying, selling, or renting properties. We can also offer you a competitively priced accounting service to file your landlord taxes every tax quarter nationwide. We are also specialized in immigration & residency visas. You can contact us by e-mail at email@example.com, by telephone on (+34) 952 19 22 88, or by completing our contact form to book an appointment.
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