Madrid’s Property Tax (IBI) Will Decrease By 7% In 2016

22 September 2015 – El País

In October, the Town Hall of Madrid will approve a 7% decrease in the property tax (‘Impuesto sobre bienes inmuebles’ or IBI) for all homes and the majority of commercial premises, offices and retail stores. This decrease, accepted begrudgingly by the minority Ahora Madrid government following its enforcement by the other parties (PP, PSOE and Ciudadanos), will be passed with equal reluctance next month by the socialists, who were seeking a higher cut. The 7% decrease in IBI will be equivalent to a €25 reduction in the average monthly bill (€350).

Yesterday, a Councillor from the Treasury, Carlos Sánchez Mato (pictured), announced a 7% decrease in the rate of IBI for all homes in the capital (1,448,765 households) and for the majority of non-residential buidlings.

Nevertheless, the rate will increase by 10% for those non-residential buildings that have a “higher cadastral (land registry) value”. The Town Hall defines this threshold as follows: for individual buildings, the increase will apply only to those that have a cadastral value of more than €35 million (there are around 30 such properties in Madrid); retail stores worth more than €860,000 (around 3,000 of more than 97,000); buildings used for sporting activities worth more than €20 million (around 30 in total); and offices worth more than €2 million (1,760 out of almost 32,000).

These targeted increases to non-residential buildings with higher cadastral values will almost entirely offset the decrease in the rate of IBI for the rest of the city.

IBI is the main source of income from the Town Hall, and therefore any change in the rate significantly affects its capacity to provide public services: IBI will account for €1,279 million of the €4,388 million that the municipal coffers will receive this year (i.e. it accounts for almost one in every three euros). The changes proposed by Ahora Madrid will reduce this revenue by just 3.7%.

A new tax

This fall in revenues (€49 million) will be primarily offset by the creation of a new tax to be paid by the companies that generate the most waste. The other municipal taxes will remain unchanged in 2016, although there may be an as -yet-unknown decrease in the price of certain services (sports centres, kindergartens, etc). (…).

Original story: El País (by Bruno García Gallo)

Translation: Carmel Drake

100