What is the relationship between the cadastral value and the amount of Real Estate Tax in Spain?

IBI is a local tax levied on the value of real estate. Its management, settlement and collection is the responsibility of the local councils, although the cadastral value is the taxable base of this tax. The law attributes to the local councils the capacity to determine the tax rates, as well as to articulate certain tax benefits, all of which ultimately determines the tax rate.

In particular, the law provides for various tax mechanisms which, following a general collective valuation procedure, make it possible to control the effect of the new cadastral values on IBI.

Firstly, the IBI taxable base is calculated by applying an ex officio degressive reduction over a ten-year period. This reduction is 90% of the increase in the cadastral value in the first year of the revision, 80% in the second year and so on until in the tenth year a base equal to the revised cadastral value is reached. This means that, in general, the taxable base for the first year of the revision is equal to the previous value (unrevised) plus 10% of the increase in value experienced by the property as a result of the revision.

On the other hand, the local councils, within the framework of their management autonomy, can establish the tax rates, between a minimum rate of 0.4 and a maximum rate of 1.1 for urban properties and between a minimum rate of 0.3 and a maximum rate of 0.9 for rural properties. These rates may be reduced during the six years following the cadastral revision by up to 0.1 in the case of urban property and up to 0.075 in the case of rural property.

The tax rate applicable to real estate with special characteristics, which will have a supplementary character, will be 0.6 per 100. The Town Councils may establish for each group of these existing in each municipality, between a minimum differentiated rate of 0.4 and a maximum of 1.3.

Likewise, Royal Legislative Decree 2/2004, of 5 March, which approves the Revised Text of the Law Regulating Local Treasuries, empowers Local Councils to approve a rebate that limits the individual increase in the IBI quota resulting from the revision, in such a way that this increase does not exceed the percentage decided by the municipality. The maximum duration of this rebate is 3 years.

The IBI quota after the collective valuation procedure is communicated in the notification of the cadastral value, as a guideline.

Arts. 67 and following of the TR of the Ley Reguladora de las Haciendas Locales (Law Regulating the Local Treasuries)

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