IBI is a direct tax, which taxes the ownership of rights over any real estate. It is part of the municipal taxes collected by local municipalities. This fact means that depending on the municipality where the taxed property is located, the rate varies.

Some types of real estate are exempt from this tax: Buildings owned by public bodies, diplomatic buildings, Church property, and organizations such as the Red Cross, Historical Heritage buildings, or land occupied by the railways.

How much and when must I pay?

As mentioned previously, the IBI is a tax that depends directly on the city council, which determines the rate.

It calculates the rate from the cadastral value of the home, the appraisal of the real estate carried out by the General Directorate of the Land Registry that is governed by the Ministry of Finance, considering the location, age, quality of construction, expenses, cost of the land, among other characteristics.

Based on this cadastral value, the council in question establishes a rate to apply for each property. After that, coefficients are applied by the Ministry of Finance, as stipulated by the Local Finance Law.

Usually, the cadastral value of urban real estate fluctuates between 0.4% and 1.3%.

Just as the city council determines how much must be paid, it also determines when payments must be made. In some municipalities, payments in advance provide rebates. However, a word of warning! If you are late on a payment, you pay a surcharge.

The final aspect to consider with the IBI is who the payee is when purchasing a new home. Again, the answer is straightforward: Real Estate Tax is paid every year on 1 January by the property owner.