Annual Real Estate Tax (Impuesto sobre Bienes Inmuebles, IBI)

This tax is very similar to the local rates or community charge that you pay to the local authorities in your home country. All property owners, both resident and non-resident, have to pay the tax annually to the local administration that covers the area where the property is located. The tax can be paid by standing order from your Spanish bank account and this is probably the most convenient method if you are a non-resident since late payment will result in surcharges being added to your bill.

The amount of tax you are liable for is calculated by referring to the official valuation (valor catastral) recorded by the Land Registry (Catastro) which is usually lower that the real market value. Other factors such as the location, size or nature of your property may also be taken into account. Because this is a municipal tax, rates vary from place to place; a typical local authority like Marbella currently charges 0.65% of the registered value per year.

Your local town hall will give you a receipt to show that the tax has been paid. This receipt is very important when it comes to selling your property for two reasons. First, because it shows the property’s reference number for the Land Registry (Referencia Catastral). Second, because this tax is attached to the property itself, not the person who holds the title deed. Therefore, if the property is sold with an outstanding debt for the Real Estate Tax, responsibility for payment plus surcharges is transferred to the new owner. Obviously any prospective buyer will want to ensure that the tax has been paid in full before proceeding to completion and the receipts for payment are proof that this is the case.