Local taxes to rise in a quarter of Spanish municipalities next year

Tax

Local property rates will rise in many Spanish municipalities next year thanks to an update in cadastral values just approved by the Government.

Cadastral values have just been updated in 2,452 municipalities all over Spain, and will rise in 1,895 of them, which will translate into higher taxes like IBI and the plusvalia that vendors have to pay.

Cadastral values, which are (normally) lower than market values, are used to calculate taxes like local rates (IBI) and the plusvalía tax paid by vendors when they sell.

Town halls are allowed to update cadastral values to reflect market realities every five years, and are obliged to update them every ten years. However, most municipalities fail to meet that deadline, and updates are done on average every 21 years.

Cadastral values, and corresponding taxes, are going up in municipalities that last updated before the boom, and falling in areas that updated more recently. Rates will rise in Valencia City, Granada, Alicante, and Tarragona, amongst others. More than half of the place where rates will rise have not updated their cadastral values since 1990 or before.

IBI will go up next year in municipalities where cadastral values have been increased in this update, but because of the way IBI is calculated most homeowners will not see much of an increase in their quarterly IBI bill. They might find the pending increase in tax on alcohol and tobacco takes more out of their pocket.

About Mark Stücklin

Mark Stücklin is a Barcelona-based Spanish property market analyst, and author of the 'Spanish Property Doctor' column in the Sunday Times (2005 - 2008).

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