In Madrid, a proposal has been put forward to change the calculation method for the real estate tax (IBI) to make it progressive and increase the burden on major property owners and companies. According to El Pais, the initiative was submitted to Congress by the Más Madrid party through the Sumar platform, and calls for a reform of the national law on local finance.
The essence of the proposal is to give municipalities the right to set different IBI rates depending on the cadastral value of the property. Currently, the tax is calculated at a single rate for everyone, regardless of the property’s value. In Madrid it is 0.414%, in Barcelona — 0.66%, in Valencia — 0.57%. The new scheme would allow the introduction of progressive scales: the higher the value of the property, the higher the tax rate.
A blow to large landlords
Special attention is paid to large property owners — the so-called “grande tenedores.” Under current law, these are defined as owners of 10 or more apartments in one municipality (or 5 or more in high-demand areas). Más Madrid proposes lowering this threshold to 4 properties so that more owners would be subject to the higher rate. For such owners, the tax coefficient could rise to 1.6, and for legal entities — to 1.3. If a property is owned by several people, the increased rate applies if more than 25% of the property does not belong to individuals.
According to the authors of the initiative, this should reduce the attractiveness of housing market speculation and redistribute the tax burden in favor of ordinary families. The text notes that municipalities will be able to lower the tax for owners of inexpensive housing without losing revenue, thanks to increased receipts from expensive properties.
Benefits for families and restrictions for landlords
An important part of the reform is the expansion of benefits for single-parent families. Currently, a 90% IBI discount is available only to large families. The new proposal extends this measure to families with a single adult. If, under the new rules, the owner’s tax increases, they will not be able to pass this on to the tenant: a ban on rent increases will apply for four years after the tax rate changes.
The issue of a progressive IBI has already been discussed in other cities. For example, in Barcelona, authorities considered the possibility of increasing the tax for owners of multiple apartments and requested clarification from the Ministry of Finance. Similar initiatives have previously been proposed at the Sumar level, where it was suggested to increase the tax for properties with a cadastral value above €250,000 and introduce additional fees for tourist apartments in high-demand areas.
Political challenges and prospects
To implement the reform, it will be necessary to amend the national law on local finances, which is only possible with majority support in Congress. In the current circumstances, this could become a serious obstacle for Pedro Sánchez’s government. At the same time, as Más Madrid points out, the current system does not distinguish between the owner of one apartment and the owner of fifteen, which hinders efforts to tackle the concentration of housing in the hands of a few.
Issues of taxation and housing market regulation remain among the most pressing in the Spanish capital. Recently, Madrid saw a large-scale protest against cuts in education funding, which also reflects tension in the city’s social policy — more on this can be found in the article about mass protests in Madrid.
For reference: IBI is the main source of municipal revenue. Its amount depends on the cadastral value, set by the Ministry of Finance, and the rate, determined by city authorities. In recent years, the tax rate in Madrid has been reduced five times, resulting in differences in payments: for a resident of Vallecas, the savings amounted to 17 euros per year, while for a property owner on Núñez de Balboa — 400 euros.
