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Property in Spain For Members

EXPLAINED: How to pay less Spanish IBI property tax

The Local Spain
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EXPLAINED: How to pay less Spanish IBI property tax
Property tax in Madrid isn't as high as in other cities despite it being the Spanish capital. Photo: Luis Quintero/Pexels

Spain’s property or council tax, usually referred to as just IBI, can vary considerably between municipalities, but there is a way to potentially reduce the cost of this annual tax.

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IBI stands for Impuesto sobre Bienes Inmuebles in Spanish, which translates to tax on property goods, but it also goes by the name SUMA.

It’s a local tax which has to be paid once a year by all property owners in Spain, and it serves as a benchmark to calculate all other Spanish property-related taxes.

READ ALSO: The real cost of buying a house in Spain as a foreigner

As the IBI amount is decided by the town hall in which your property is located, there can be big differences between municipalities. For example, in Málaga there’s a difference of hundreds of euros between what homeowners in the municipalities of Torremolinos, Cártama and Rincón have to cough up on average in IBI tax and what those who are based in Malaga city have to pay (based on a property worth €80,000).

According to a report by Spain's main consumer watchdog, the OCD, in 2023 Lleida, Tarragona and Girona are the municipalities with the highest IBI, while San Sebastián, Bilbao and Vitoria have the cheapest IBI rates.

How is the IBI calculated?

IBI or SUMA is calculated as a percentage of the cadastral value of the property, an amount which is recorded at the local land registry.

By law, IBI tax on urban properties must be between 0.4 percent and 1.1 percent of the value of the property, although it can be up to 1.3 percent in provincial capitals with more services and amenities. For rural properties, the IBI amount is usually slightly higher than urban properties, usually because they are bigger and have more land.

Catastro and catastral are words you’ll come across a lot if you own a property in Spain – they essentially refer to the land registry or records office which has information about your property and all others in your municipality in Spain.

In recent years the Spanish press has even coined the word catastrazo to refer to big changes in the rate of property price valuation.

The valor catastral (land registry value) of a property is determined by its location, size, the value of the land, the land’s urban characteristics, the material cost of the building and its age, among other factors.

Spanish property website Fotocasa also has a tool that allows you to estimate your IBI tax bill, which you can find here.

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Let's look at a few examples of provincial capitals to give you an idea.

According to Fotocasa, the IBI on an urban property (based on a property worth €80,000) in Madrid is €365; in Valencia €576; Seville €541; Las Palmas €536; Barcelona €522; Murcia €520; and Alicante €502.

Is it possible to pay less IBI?

Yes. In many cases there are discrepancies in the value assigned to your property by your local tax authorities and its actual value.

Using your cadastral reference number (20 digits) you will be able to check either in person at your local town hall or on this government website if your property has been overvalued and whether you are within your rights to pay less IBI tax. 

READ ALSO: Spanish mortgages: Ten things foreigners should know before getting one

Keep in mind that in most cases, the value assigned to a property by your local land registry is below its actual market value, but if you suspect you are paying too much IBI or you’ve spotted mistakes on your property’s land registry record, this may be the correct path to follow.

It may be that you receive a notification from your town hall that the value of your home has been increased and you either spot mistakes or information you don’t agree with.

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Idealista has this useful tool which allows you to get an estimate of a particular property’s sale value and fair rent evaluation, although Spain’s main property website does stress it is not a tasación official (official evaluation).

You will need to enlist professional help in order to assess whether it’s possible to make a claim, and as bureaucracy reigns supreme in Spain, you can expect a lot of paperwork.

Photo: Pexels/Pixabay

Tax optimisation companies such as 60 días or legal firms specialising in property like Ático Jurídico can help with this.

To narrow down your search for possible firms specialising in this, google the words subsanación de discrepancias en el catastro inmobiliario.

It may be possible for the property holder to present the claim themselves without seeking legal help, but don’t expect this to be easy and it will depend on the details of the alleged error by the land registry.

In the event that they find that you are paying more, it will be possible to ask to be reimbursed retroactively for the excess that you have been paying over the years as well.

Furthermore, if your local town hall agrees to the change of your property’s cadastral value, this will also mean you end up paying less in other taxes such as IRPF (income tax), Impuesto sobre el Patrimonio (wealth tax) and Impuesto sobre Sucesiones y Donaciones (inheritance tax).

So, if you’re paying thousands in IBI tax every year and you suspect it should be lower, it’s probably worth finding out if you can make a claim, as the government’s property appraisals usually only change every ten years.

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It sounds complicated. Are there other ways to pay less IBI?

There are a number of other ways to save money on your annual property tax in Spain, although this will largely depend on what your town hall offers.

Paying by direct debit is often a way to shave off some euros, as many municipalities offer a 5 percent discount for those willing to set up this automatic yearly payment.

Single-parent families and families with three or more children can often get a discount of up to 90 percent on their IBI, so it’s definitely worth checking if your municipality in Spain offers this.

There could be other municipal discounts available, from installing solar panels in your Spanish home, to having your property be part of an agricultural cooperative.

READ MORE: What you should know before getting solar panels for your home in Spain

Social housing property owners can usually get a 50 percent discount on their IBI for the first three years as well.

As a result of the coronavirus crisis, some municipalities are offering struggling residents big discounts on their IBI too.

So the first port of call if you’re looking for a discount on your IBI tax should be your town hall or their website.

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