The tax on ownership of real estate in Spain is known as the 'IBI' (Tax on Real Estate). It is an annual tax levied on all real estate property (flats, chalets, parking spaces etc.) and charged directly by the local council to the title-holder of the property as of January 1 of that year. The tax is calculated as a percentage of a base amount known as the 'catastral' value of the property which is the sum of the value of the land plus the construction itself. It is the local council itself that establishes these values and it should be borne in mind that they rarely reflect market value. The percentage applied to this base value will depend varies from place to place and will depend on the number of inhabitants of the particular area under the administrative control of the local council. As the tax is charged to the owner as of January 1 of the corresponding year, any change in the ownership thereafter will not affect the obligation of the original owner to pay the tax. For example therefore if A sells a property to B on March 1, it is still A who will be under the obligation to pay the entire year's tax although of course they can privately come to an agreement regarding a fairer division of the amount to pay.
This tax is levied on the ownership of all real estate property with the following exceptions:
1. Real estate held by the government or other local and provincial government bodies.
2. Motorways and other thoroughfares freely available to the public.
3. Real estate held by the Catholic Church.
4. Real estate held by other non-catholic confessions which are legally recognised by the Spanish state and with whom the state has signed a cooperation agreement to this effect.
5. Property held by the Red Cross.
6. Property held by foreign governments for the purposes of diplomatic or consular representation in line with international agreements signed to this effect.
7. Real estate held by other organisms or entities with whom Spain has signed an agreement to this effect.
8. Land and buildings belonging to railway lines.
9. Land, parks and building considered to be of historical or cultural interest.
It should be noted also that in recent years the percentage applied to the 'catastral' value has steadily increased and is likely to continue to do so bearing in mind the precarious financial situation of many of the local councils in Spain.
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