What is the IBI? What you should know about the Real Estate Tax

Being a homeowner comes with certain responsibilities. For new owners, the tax issue can be complex. Knowing where to pay, how much and whether or not there are bonuses, among others, can be a matter that takes a lot of time and mental effort.

To make the process easier, at Sky Marketing we explain everything about what the IBI is, how to pay it, if the IBI prescribes , among many other common doubts. No need to worry – it’s simpler than it sounds!

What is the IBI and who pays it?

The Real Estate Tax (IBI) is an annual tax paid by every owner for the possession and right to use a real estate; be it houses or flats, commercial premises and rustic or urban farms.

As for what the IBI is, you should know that this tax is one of the main sources of income for city councils.

How is it calculated and when is the accrual of the IBI?

The annual IBI fee is calculated by applying a coefficient -previously approved by the Town Councils-, appropriate to the cadastral value.

For urban properties, the coefficient varies between 0.4% and 1.3% depending on the municipality. The IBI payment must be made by the person who owns it on January 1. If there are several owners, you can divide your subscription between each of them.

This means that the accrual of the IBI occurs on January 1 of each year and, the person responsible for paying it, is the owner for that date. If a property is sold during the year, it does not matter at what time, the tax must be paid who had ownership for January 1 , although by the time of payment they are no longer the owner.

How to pay the IBI online

IBI payment can be made either in person or online. If you want to pay it in person, payments can be made in banks or savings banks that collaborate with the collection at the municipal level. If you want to pay the tax online, you must use the SUMA website.

In both cases, you can decide if you want to pay the IBI in cash or in installments. The types and forms of payment depend on the town hall where the property is located, which in many cases includes the possibility of direct debit.

How to split the IBI payment

There are two ways to split the IBI payment. The first option is Payments à la Carte or PAC. Using this way of splitting the payment, a 5% bonus is applied to each installment with a limit of 70 EUR per receipt. Using the PAC, the payment is divided into 2, 3, 5 or 9 installments depending on whether it is monthly, bimonthly, quarterly or semi-annually.

The second option is the SEPE, or Special Payment System. Using this scheme, a 3.25% bonus is applied. Before selecting the payment method, you should bear in mind that late payment is sanctioned by law, and late fees depend on how long it has been since the end of the voluntary period.

Are there tax credits to the IBI?

Yes, there are properties that are exempt from paying this tax, although in general, common taxpayers do not own properties of this type.

Among the properties that do not tax the IBI are those belonging to the Catholic Church, prisons, police stations, schools and any property of the State, the Autonomous Communities or city councils.

The IBI also deducts taxes on diplomatic headquarters in Spanish territory, as well as real estate that belongs to the Red Cross. Finally, historical buildings and real estate considered heritage are not taxed even if they are personally owned.

Has the IBI payment increased?

The update in the appraisal or cadastral value of the houses in many municipalities during the past 2016 has meant an increase in the value of the properties, which has an impact on the application of the IBI.

To lessen the consequences that this update has had when it comes to having to pay the Real Estate Tax, several city councils have chosen to lower the tax rate so that the IBI receipt remains practically the same in those cases that have undergone an update. To amortize the payment, many city councils now offer the fractionation of the increase of the coefficient for up to ten years.

Do debts for non-payment of the IBI expire?

The General Tax Law establishes a general period of 4 years for the administration to claim any tax debt, starting from the day after the regulatory deadline for filing the return or self-assessment ends.

In any case, the four-year period to claim stops at the same time that the Treasury starts the inspection or claim process of the debt from the taxpayer. That is, if the Treasury has started a judicial process for the claim, it has all the time that justice takes to resolve the case (and if it decides that you must pay, the debt will not have expired).

Is there a bonus in the payment of the IBI?

Like many taxes, the IBI has some bonuses that can be applied depending on each case. These bonuses are contemplated in the Local Finance Law.

One of the most important bonuses is the Official Protection Housing. This discount implies a 50% reduction in the IBI during the first 3 years. The bonuses can be mandatory or optional; in the latter case, each city council would decide whether to apply in its locality or not.

In addition to the ordinary bonuses of the general law, each city council can establish additional bonuses to the municipal regulations, usually bonuses for large families or discounts for direct debit payments.

All possible bonuses for each municipality are included in the tax ordinance of the IBI of the different municipalities. Those who are entitled to a bonus must request it from the city council before the end of the year in order for it to be effective in the next.

If you have more questions about what the IBI is, how to pay it, how much you should pay, the bonuses in your particular case, or any other question, do not hesitate to call us! At Deplace , our team of experts is ready to answer your questions and make the process easier and faster.