Ministry of Finance Prepares an IBI Hike that will Affect 1,200 Town Halls in 2019

1 October 2018 – El Independiente

The Ministry of Finance has already prepared the list of town halls that will review the cadastral values of their urban properties in 2019. That list includes almost 1,200 town halls, equivalent to 15% of the total. That is according to an Order published in the Official State Gazette (BOE) on Saturday, which also reveals that the update coefficients will be established in next year’s Budget Law, which the Government has not presented yet.

Therefore, despite not having published its annual accounts yet and with the threat that, once they are published, it may have to adopt a more restrictive public deficit path, thanks to the situation it inherited from the previous PP Government, the ministry led by María Jesús Montero has published the mandatory order proposed in the Law to apply possible cadastral value rises that will impact the amount raised by Town Halls through taxes such as the Property Tax (also known as the ‘Impuesto sobre Bienes Inmuebles’ or IBI).

The town halls affected include Badalona (Barcelona), Cádiz, Santander, Guadalajara, Avilés (Asturias), Granada, Huesca, Lorca (Murcia), Coslada (Madrid), Las Rozas (Madrid) and Valencia.

The State’s annual accounts for 2019 are incognito and so it remains to be seen how this review of cadastral values is going to be instrumented.

Moreover, by virtue of the coefficient that is applied, the cadastral value of any given home may increase or decrease. The reason is that the coefficients are established on the basis of the year of entry into force of the last presentation of municipal values, which is basically the document that contains the criteria that are used to carry out the most recent valuations in the region.

Currently, the price per metre squared of private homes amounts to €1,587.9, the highest value since the second quarter of 2012, according to data from the Ministry of Development, which bases its figures on appraisal values.

From this perspective, in general terms, homes valued since that date will have increased in value, whilst those valued between 2008 and 2012, will have decreased. On the basis of the years of entry into force of the values, around one third of the municipalities included on this list belong to the latter group.

A decrease in the number of reviews

The cadastral value of a home is the reference value on which taxes are paid on it at a municipal level for purpose of the Property Tax (IBI), which is one of the main sources of financing for Town Halls.

In this way, unless town halls decide to introduce changes in the tax, bonuses or exemptions, increases in the cadastral value of properties typically mean a heavier burden on the pockets of citizens and, in parallel, more revenues for the town halls.

In order to carry out this review, the interested town halls must make a request each year to apply the coefficients that they establish. To do that, three requirements must be fulfilled: at least five years must have passed since the entry into force of the cadastral values resulting from the previous valuation; there must be substantial differences between the market value and those that serve as the basis for determining the cadastral values; and the town hall must file its request by 31 May.

Having fulfilled those criteria, 1,200 town halls have requested a cadastral review next year, which represents a 14% decrease compared to the number recorded last year. Moreover, that figure equals almost half the number recorded in 2007, when up to a third of all town halls, around 2,500, proceeded to apply new coefficients (…).

Original story: El Independiente (by David García-Maroto)

Translation: Carmel Drake

Málaga is the Province with the Third Highest Cadastral Values in Spain

25 June 2018 – Diario Sur

The real estate bubble burst a decade ago, but the effects of the boom that the property sector experienced before the crisis are still reflected in the cadastral values of the assets in the province, a circumstance that would not be so important, if it wasn’t for the fact that this variable is the one that the administrations use to set the tax rate for the state (IRPF and property), the region (Sales and Transfers) and municipalities (IBI and capital gains). Although in recent years, those values have been corrected downwards to reflect market prices, the reality is that the strong pull of the Costa del Sol places Málaga in third position in the national ranking of Spain’s highest cadastral values. Together, the 1.45 million properties registered in the province have a total value of €114.1 million, which translates into an average of €78,598 each.

That average, which is well above the national average (€59,424), is exceeded only by the Community of Madrid (€115,779) and the Balearic Islands (€81,234), and comes ahead of Barcelona with an average €76,944. According to statistics managed by the General Directorate of the Cadastro, the differences are also more than considerable compared to other provinces of a similar size, such as Valencia (€51,271), Zaragoza (€66,914) and Sevilla (€55,397), as well as with other predominantly tourist areas, such as Alicante (€45,481), Las Palmas (€64,054) and Tenerife (€56,601).

The trend in recent years has been downwards after the peak of 2013 (€90,770 on average), although the current figures are still a long way from the €49,921 that was registered in 2006. That reduction is the result of the updates to the cadastral figures that are being made in most municipalities, be it because they are due because ten years have passed since the last update, or because the Town Halls have requested them once five years have passed and provided substantial differences exist vis-à-vis market prices (…).

Whilst the differences are notable between different parts of the country, if we zoom in on the province of Málaga, we also see significant variations between the 103 municipalities that comprise the province, where the average is €78,600. The western coast takes the biscuit with Benahavís in the lead, with an average of €154,770. That figure doubles the average for Málaga capital (€70,201) and is explained by La Zagaleta, the most luxurious urbanisation in Europe. Although clearly not all of the properties in this municipality of barely 7,350 inhabitants have the same value, the 14,437 properties there have a combined value of €2.2 billion, placing it above cities such as Antequera and Ronda in the ranking even though those towns issue twice as many receipts (29,415 and 25,403, respectively).

Just behind Benahavís is neighbouring Marbella, with an average of €125,350, and other towns in the area such as Ojén (€103,790), Mijas (€96,780) and Manilva (€90,960). Alhaurín de la Torre also sneaks into the top of the ranking, whilst on the next step down are other municipalities on the west coast such as Benalmádena (€88,040), Estepona (€80,440) and Fuengirola (€79,090).

Original story: Diario Sur (by Francisco Jiménez)

Translation: Carmel Drake