Spanish IBI Tax Explained
Many non-resident property owners in Spain may not realise that they become liable to pay IBI tax, Impuesto sobre Bienes Inmuebles, for the following year. If you visit your property in Spain for up to 183 days in one year, you are classed as a non-resident. It is your responsibility to maintain control of this tax, because it is not your local Town Hall’s responsibility to notify & remind you of this tax. You will need to find out how much you owe and comply with the Tax Authorities.
WHAT IS THE IBI TAX?
Equivalent to a Council Tax, IBI tax is one of the most important necessities that you need to maintain, because it linked to the valuation for tax purposes of your home known as ‘cadastral value’. This is used as a benchmark to calculate all of your property related taxes.
In some areas of Spain, the Alicante province included, IBI tax is also known as SUMA. Suma Gestión Tributaria is a public provincial agency set up by the provincial Council of Alicante, specializing in tax administration: assessment, billing, collection and enforcement.
Rather than being a national tax, just like the Non-Resident tax (for non-resident property owners in Spain), IBI is a local tax levied by the Town Hall where your property is located. IBI tax should be paid once a year (normally due in August to November).
This is based on the rateable value of your property, approximately 0.4 – 1.1% of cadastral value per annum. Owning rural land would be charged low hundreds of euros, while top of the market properties in expensive areas, such as Marbella, would be charged several thousands of euros per year.
The calculation of all property-related taxes require the IBI tax, acting as a benchmark.
Upon the sale of a property in Spain, you will need to provide IBI invoices for the previous 4 years to the buyers lawyer.
IBI must be paid, once a year from August to November.
CONSEQUENCES OF MISS PAYMENT
There are consequences for not paying your IBI tax, this includes:
Upon selling your property, a buyer’s lawyer will hold a big retention of monies to safeguard against any unpaid IBI tax.
When selling your property, you may forfeit the 3% sales proceeds tax rebate and legal interests.
Your property being impounded and sold off in a public auction.
Not being able to file and pay NRIT (Non-Resident Income Tax) and NRIIT (Non-Resident Imputed Income Tax) taxes, as these are required for IBI tax calculation.
At PSI Consultants, our experienced legal, fiscal & visa experts can help you acquire residency & nationality in Spain through property investment in Spain. We will guide you through the whole process of gaining Golden Visa residency in Spain and we offer a wide range of services related to the management and transmission of property ownership in our department dedicated to conveyancing, donations & inheritances. Also in our legal department we manage the obtaining of NIEs, Residences, Wills, private contracts, representation and personalized legal consultation on all related matters.
If you would like to learn more about our Spanish services in the Costa Blanca area, please feel free to contact us at any time when our office is open between 9am - 2:30-pm, Mondays to Fridays.
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