Property owners in parts of the Costa Blanca are facing massive hikes in their local rates, reveals a recent article in the Costa Blanca’s English-language news paper Round Town News (RTN). This is not the first time expat owners have seen their rates more than double overnight. Taxes on property owners have been going up all over Spain, as local authorities go after easy targets to shore up municipal budgets.

In this case, residents of the Monte Pego urbanisation on the Costa Blanca have been hit with tax hikes of almost 700%. “An average villa on the Monte Pego will see its local rates, known as the IBI, soar from €136 to €539 per year after the ‘catastro’ – similar to the UK’s rateable value – was reviewed in Madrid,” explains the RTN article. “Before 2008, the catastro rate for Pego land was €19 per square metre. The town hall requested a review and a new value was set in the Spanish capital of €149 per square metre – an increase of almost 700 percent.”

Even the town hall admits the increase in the IBI is excessive, explains the article. But now the increase has been set, the only way to fight it is through costly legal action that might not succeed.

Tax authorities exaggerate property sizes

It also appears that the tax authorities have been exaggerating the property sizes that rates are based on. Careful scrutiny of IBI bills shows that property sizes have increased from one year to the next. “It appear that this has happened to most if not all of us, meaning that we are paying tax on land that does not actually exist,” Stephen Joyce, a Monte Pego resident, told RTN.