Property taxes in Spain

What is the IBI property tax?

Property tax in Spain, known as IBI (Impuestos sobre Bienes Inmuebles), is a mandatory annual payment for property owners. It constitutes one of the main sources of municipal income, which use these funds to finance public services and is one of the costs of maintaining property in Spain.

When is the IBI tax paid?

The IBI tax is payable once a year, usually in September or early October. The property owner receives the bill by mail, and payment can be made at the city hall.

When paying the tax, it’s worth having your passport and a copy of the property deed with you. It’s also possible to facilitate payment through a standing order from a Spanish bank account, which allows for automatic withdrawal of the amount from the account.

How much is the IBI tax?

The IBI tax rate in Spain depends on many factors, such as the cadastral value of the property, geographical location, as well as the size of the plot and buildings. On average, rates range from 0.4% to 1.3% of the cadastral value for urban properties and from 0.3% to 0.9% for properties located outside the city.

Examples of IBI rates in different regions

For example, in the Costa Blanca region rates range from 0.4% to 1.1%, while in Costa del Sol they are similar, ranging from 0.5% to 1.2%. Based on these rates, we can calculate the expected tax.
How to calculate property tax in Spain?

Calculating I.B.I. tax in Spain requires several steps:

1. Establishing Cadastral Value: This value is usually lower than the market value and can be found in the property’s tax documents.
2. Checking the Tax Rate: Rates differ depending on the region, so it’s worth consulting with the local office.
3. Applying the Formula: We calculate the tax according to the formula: I.B.I. tax = cadastral value × tax rate

Example calculations

Example 1
Let’s assume you own property in Malaga with a cadastral value of 150,000 € and the applicable tax rate is 1.0%
I.B.I. tax = 150,000 € × 0.01 = 1,500 € per year

Example 2
Example: if the cadastral value of an apartment on Costa Blanca is 120,000 € and the applicable rate is 0.7%,
I.B.I. tax = 120,000 € × 0.007= 840 € per year

Tax for non-residents (IRNR)

Non-residents who own property in Spain are obliged to pay property income tax (IRNR). This tax is mandatory, regardless of whether the property is rented or used privately.

How to calculate the IRNR tax?

The IRNR tax is calculated based on the cadastral value of the property and the appropriate tax rate, which is 24% for non-residents from outside the EU and 19% for EU and EEA residents.

The amount of this tax is not excessively high, however its settlement is mandatory, which not everyone knows about, exposing themselves to administrative penalties. The income subject to declaration is the amount resulting from calculating 2% of the cadastral value of the property (1.1% in case of update) and applying the tax rate. The declaration must be filed by the end of the calendar year (by December 31) using form 210.

Example for privately used property

Let’s assume the cadastral value of the property is 200,000 €:

1. We calculate the tax base:

Tax base = 200,000 € × 1.1% = 2,200 €

• Then we calculate the tax:

IRNR tax = 2,200 € × 19% = 418 € per year

Example for rented property

Ms. Kasia, a resident of Poland, rents her apartment in Alicante for 1,000 € per month. Additionally, she incurs monthly property-related costs of 180 €. The calculations are as follows:

1. Income calculation

First, we subtract costs from rental income:
Taxable income = 1,000 € × 12 − 180 € × 12 = 12,000 € −2,160 € = 9,840 € per year

1. IRNR tax:

IRNR tax = 9,840 € × 19% = 1,869.60 € per year

Summary of information about I.B.I tax

Property taxes in Spain, including IBI and IRNR, are a key element that should be taken into account when planning to buy property. Remember that tax rates may differ depending on the region and type of property and are only one of the costs of maintaining property.