What is the "IBI" in Spain, how is it calculated and why does the "IBI" fee vary each year?
IBI in Spain stands for "Impuesto de Bienes Inmuebles" which could be translated as Tax on Real Estates, this is essentially a local tax that must be paid by the owners, usufructuaries, concessionaires or holders of a surface right of any real estate (apartment, parking space, storage room, store, house, office, etc.) on a yearly basis.
This is the way it works: the person who is the owner on January 1st must pay the entire tax, as the IBI is a yearly taxation, even if the property is later transferred. That is, the new owner has to pay the tax from the year following the date of acquisition.
The IBI is calculated taking as reference the cadastral value of the property, to which the tax rate must be applied and this is set by each city council or municipality in Spain. So the IBI takes as reference:
- The cadastral value of the property, which adds the value of the land and the value of the construction (tax base)
- The tax rate of each municipality.
So the IBI yearly quota depends mainly on the cadastral value and the tax rate therefore this quota varies depending on the variations in the cadastral value, which is due to the evolution of the market values of properties.