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Financial Dictionary - IBI


Property tax, or IBI, is a mandatory tax paid by practically all property owners every year to their local councils. This tax is an important source of income for the municipalities. It is also rather controversial, as owning a property does not always mean a benefit is being received.

The amount to be paid is determined by the local council, based on two pieces of information from the government:

  • The cadastral value, a fixed valuation for each property determined by a number of parameters: location, land, age, work performed and condition. This appraisal is performed by the General Directorate of the Land Registry, which reports to the Ministry of Finance. The appraisal is usually reviewed every ten years, as the parameters change over time. This review is carried out by estimating an average valuation for the area and then valuing each property. The cadastral value should not be more than 50% of the property's market value. You can check this valuation on the Land Registry website.
  • Between 0.4% and 1.3% of the cadastral value. This range is set by the government, with the local council choosing the percentage applicable to its municipal property tax (IBI). Therefore, the local council does not have total freedom to set its tax rate, but it does have some room for manoeuvre. The council can also consider any additions or reductions it considers appropriate. It is therefore quite difficult to calculate the IBI precisely.

When is it paid?

The dates depend on the local councils and municipal authorities, which decide the period.

Who pays the property tax (IBI) on property sales?

The owner of the property on 1 January of the year of the sale has to pay. However, the Supreme Court has established that the seller can pass this on to the buyer in proportion to the time they enjoyed the property during the year.

Which properties are exempt from IBI?

As we have seen, some buildings do not have to pay this tax:

  • Properties owned by the government, autonomous communities or bodies of the local municipality.
  • Buildings for social use: prison, defence, education and security services, etc.
  • Properties belonging to the Catholic church.
  • Some associations recognised by the municipality.
  • Properties belonging to the Spanish Red Cross.
  • Properties used by foreign governments and official bodies.
  • Locations declared to be monuments or places of social or cultural interest.
  • Public roads: motorways and paths.


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