What is Property Tax?

The property tax (IBI) is one of the most common taxes that directly affect the ownership of homes, premises, or land. It is a municipal tax collected by city councils and levied on the possession of real estate, whether rustic, urban, or with special characteristics. Knowing what property tax is and how it works is key to correctly managing any property, whether you are a regular owner or have a second residence or rental properties.

In this post, we explain how property tax is calculated, who must pay it, when it is paid, and how Espígul can help you keep everything up to date.

How is Property Tax Calculated?

To understand how property tax is calculated, you need to know that the key value is the cadastral value of the property. This value is determined by the cadastre and takes into account aspects such as location, surface area, use (residential, commercial…), construction characteristics, and age.

Once this cadastral value has been established, the city council applies a tax rate, which varies depending on the municipality (usually between 0.4% and 1.1% in urban areas). Therefore, the basic formula is:

IBI = cadastral value x municipal tax rate

In addition, some municipalities may apply bonuses or surcharges depending on the use of the property (for example, large families or unoccupied properties).

Who Pays Property Tax?

One of the most common questions is who pays property tax: the answer is clear. It must be paid by the person who is the owner of the property on January 1 of the fiscal year. This means that, if a home is sold during the year, the seller will still be responsible for paying the IBI corresponding to that year.

However, in sales transactions, it can be agreed between the parties that the tax is divided proportionally according to the months of the year in which each party has been the owner.

It is also important to keep this tax in mind in the case of rentals: although legally the owner is the one who must pay the property tax, in some contracts it can be agreed that the tenant pays it.

When is Property Tax Paid?

Knowing when property tax is paid is essential to avoid surcharges. Each city council sets its own deadlines, but normally an annual payment is made and can be direct debited for convenience.

Most municipalities offer the possibility of dividing the payment into two or more fractions (for example, in April and October), and some even offer monthly payment systems. Always check the tax calendar of your city council to stay up to date.

If it is not paid within the established period, surcharges and interest are applied. That is why it is advisable to have everything automated or have the advice of real estate professionals.

Manage your Taxes with the Support of Espígul

At Espígul, we accompany you throughout the real estate process: from the purchase to the subsequent management of the home. If you have questions about what property tax is, how it is calculated, who pays it, or when it should be paid, we are here to help you.

Our experience allows us to offer you a comprehensive service: we inform you, advise you, and anticipate any procedure that may affect you as an owner. With us, you can manage and pay property tax with total peace of mind and confidence.

Contact us for more information!