The official name for what we sometimes call ‘Council Tax’ in Spain is IBI – Impuesto sobre Bienes Inmuebles, which simply translates as Tax on property/real estate.
By law, the person who owns a property on the date on which the IBI starts to accrue is the one who is responsible for the payment of the tax for that whole year. In Spain the tax/fiscal year runs from January to December and IBI starts to accrue, although doesn’t need to be paid by, the 1st of January each year.
When you are buying a property, the Title Deed will usually state that the IBI is all paid up to date by the vendor and it’s quite uncommon for the vendor to demand a proportional part of the tax back from the buyer relating to the part of the year which remains once the sale has taken place. For example: If the sale takes place on the 30th June, the vendor could try and negotiate with the buyer that 50% of what he has paid should be borne by them, but this isn’t common.
A RECENT JUDGEMENT TO BEWARE OF!
Be aware that the situation has changed as a result of a recent judgement by the Supreme Court.
Now, when buying a property, buyers need to ensure that in the title deed it states that the vendor be responsible for the entire payment of IBI in the year which the sale takes place. If this isn’t expressly stated, the vendor has the right to demand the proportional part of the tax from the buyer for the remaining days in the year, post-sale.
The Court found that even though the owner on the 1st of January should pay the tax, this repercussion is possible – that the vendor has the right to demand the proportional part back.
Furthermore, it found that this right exists even if the Title Deed hasn’t made mention of it. In fact, this judgement arose in a case where the Title Deed hadn’t made any specific reference to it and where the sale took place ‘free from liens and charges’.
So our advice if you are buying: Make sure that the deed expressly states that the vendor assumes the responsibility for paying the IBI in full that year and that they will not demand any part from you for the remaining part of the year.
And our advice if you are selling: Why not use your right of demanding the proportional part of the IBI post sale as a negotiating factor when agreeing a selling price?
We at Abad would be happy to assist you in buying or selling your property so please do not hesitate to contact us via our web page shown in the links to the right.