One of the main expenses that we will assume when we become homeowners is the IBI or “the contribution”. But, what is it and how is the IBI calculated ? We will tell you.
What is the IBI?
IBI stands for "Impuesto sobre Bienes Inmuebles", which translates to Property Tax. This tax, which taxes homes or commercial premises, is municipal in nature and, therefore, it is the town councils that are responsible for processing and collecting it.
Who should pay the IBI?
The payment of the Property Tax falls on the owners of a property. However, there may be rental contracts where it is specified who will be responsible for paying this tax.
And if we have bought or sold a property, who is considered the owner for the purposes of IBI? Simple, the IBI must be paid by whoever is listed as the owner as of January 1 of each year.
Who else should pay the IBI?
- Those persons who are listed as holders of a right of usufruct over a property, in the case of inherited property, must assume the payment of the IBI .
- Those who are co-owners of a property will also be responsible for this, although in this case the corresponding town hall may be asked to divide the tax settlement.
- In the case of a rental, the IBI will be paid by the owner unless otherwise stipulated in the contract . In addition, in the case of old-rent rentals, the owner may claim said tax from the tenant.
Are there properties exempt from paying IBI?
These are some cases exempt from paying the IBI , although there are more exemptions:
- Properties owned by the Catholic Church.
- Properties belonging to the state, autonomous communities or entities related to security or education such as police stations, prisons or schools, among others.
- Those who are dedicated to defense.
- Diplomatic headquarters of other countries.
- Protected historical sites or real estate assets that form part of the National Heritage or Historical Heritage, among others.
- Those who belong to legally recognized non-Catholic confessional associations.
How the IBI is calculated
To know how the IBI tax base is calculated, you must take into account two elements: the cadastral value of the property and a coefficient that is applied to that cadastral value and that may be different in each municipality:
- Cadastral value: you can check it on the Cadastre website . Normally, it does not exceed 50% of the market value of the property. This value is calculated based on different variables, such as location, age, cost of works carried out on it, state of conservation, etc. Every ten years, the cadastral value of all properties in a municipality is reviewed.
- Coefficient on the cadastral value: It is the central government that sets the percentages between which this coefficient can be, and the town councils decide the coefficient they want to apply to their IBI.
Bonuses that affect the IBI
To know exactly how the IBI is calculated, you will also have to take into account any possible bonuses that may apply to you. Here are some of them:
- VPO bonuses: officially protected housing has a 50% reduction in the first 3 years.
- Rural assets of agricultural cooperatives: here the bonus reaches up to 95%
- Special bonuses from local councils: it could be that your local council includes bonuses related to being a large family, or bonuses for direct debit, for example.