IBI property tax in Mallorca: how it is worked out

It is the running cost every owner pays whether the property is used or not, and the one buyers most often forget to ask about before they commit.

How the bill is built

The cadastral value is assigned by the cadastre and combines a land component and a building component. It is generally well below market value, though the gap varies by municipality and by how long ago the values were revised. The town hall then applies its own rate to that value within the limits set by national law. Cadastral value multiplied by rate equals the annual bill.

Why bills vary so much

Two factors compound. First, municipalities set different rates. Second, cadastral revisions happen at different times, so one town may still be working from values fixed many years ago while a neighbouring one has recently updated them. The result is that the annual bill on comparable properties a few kilometres apart can differ by a wide margin, and the difference persists year after year.

The debt follows the property

Unpaid IBI attaches to the property itself, which means the town hall can pursue the current owner for arrears left by a previous one, subject to the applicable limitation period. This is why the last IBI receipt is a standard completion document and why a buyer should insist on seeing proof of payment for recent years rather than accepting a verbal assurance.

A worked example shows the arithmetic. A cadastral value of 180,000 € at a municipal rate of 0,6 % produces an annual bill of 1,080 €. The same property in a town charging 0,9 % pays 1,620 €, a difference of 540 € every year, or 10,800 € over 20 years of ownership. Ask for the last 2 receipts before you offer, not after completion.

The receipt also confirms the cadastral reference, which is needed for the deed and for later tax filings.

Practical points for owners abroad

Set up a direct debit, since paper notices sent to a Spanish address are of no use to an owner living elsewhere and missing the window triggers a surcharge. Keep the cadastral reference and the receipts, which are needed for the non-resident income tax return. And check the cadastral description against the property: an error in surface area or a recorded pool that does not exist can be corrected, and it lowers the bill for every future year.

One more comparison is useful. Two properties both worth 350,000 € on the market can carry cadastral values of 120,000 € and 210,000 € depending on when each municipality last revised them, which at the same 0,7 per cent rate produces annual bills of 840 € and 1,470 €. Over 20 years that is a difference of 12,600 €.