Signing on the Empadron
The Cost of Living
The good news is that running and maintaining a property in Spain is generally much cheaper than doing so in the UK and your payment obligations are:
- If you have a mortgage it is compulsory to have building insurance and the bank will insist on being the beneficiary of the policy, they have the right to see these policies to ensure the wording is correct. Generally premiums for property and contents insurance are not dissimilar to rates charged in the UK and there are many companies offering comprehensive policies in English.
IMPUESTO SOBRE BIENES INMUEBLES also known as IBI or SUMA (LOCAL RATES)
- This is the main property tax and is equivalent to council tax in the UK, the collected money is used to pay for local amenities and services, etc. The amount of tax is calculated by reference to the valor catastral (Ratable Value) registered in the tax office. The valor catastral takes into account the value of the land and buildings and reflects the position and use, although in practice the value attributed is far less than the real value.
- Properties are re-valued every 10 years and the amounts increase annually according to inflation. Rates for IBI vary from area to area but typically are set between 0.2% and 0.4% of the valor catastral. The Spanish Government will be increasing the valor catastral to keep it in line with current property prices, so taxes have been increasing over the past couple of years.
- In certain areas there is a Community of owners, a legal body set up to maintain the common grounds and buildings of the estate. Typically a president will be elected to ensure the smooth running of the Community, by law he or she must be an owner and serve unpaid.
- Each owner within THE COMMUNITY is expected to contribute to the running costs of the services that the community provides, typically these are things like security, repainting, ground and garden upkeep, swimming pool maintenance, building insurance etc. The budget for these works is set at the AGM and owners will approve the budget BY a majority vote with contributions being set ACCORDING TO THE size of the PROPERTY or plot in proportion to the COMMUNITY as a whole.