The Real Estate Tax (IBI) is an essential municipal tax levied on the owners or users of real estate. The main purpose of this annual tax is to finance the public services that the municipalities offer to their citizens, from basic aspects such as waste management to public safety, including the maintenance of green areas, lighting, education and culture.
Who is responsible for IBI in a sale and purchase?
The Real Estate Tax (IBI) is a local tax levied on the ownership of real estate. Whether the land is urban, rustic or with special features, this tax is levied on the real property rights held over these assets.
The City Council of the municipality where a transferred property is located seeks payment by the registered owner as of January 1 of each year, which is the date of accrual of the tax. According to the Ley Reguladora de Haciendas Locales, IBI taxpayers are the natural or legal persons who hold the ownership of the right constituting the taxable event, normally the property.
For example, if the sale is made in June of a given year, the seller, being the owner on January 1 of the same year, will be responsible for the payment corresponding to that fiscal year.
Supreme Court Ruling
A recent Supreme Court ruling has marked a crucial change in the way IBI liability was assumed in real estate transfers. Until now, it was commonly accepted that the seller covered the full year’s IBI, and any transfer of the outstanding proportional part to the buyer had to be explicitly agreed.
Now, the seller has the right to pass on to the buyer the proportional part of the IBI corresponding to the remaining days of the year, unless expressly agreed otherwise. This change introduces a new criterion that modifies the previous practice and redefines the financial obligations in real estate transactions.
What happens when a house is sold in the middle of the year?
In these cases, it is feasible to agree between the parties that the buyer will be responsible for the IBI in proportion to the time he will enjoy the property. If the sale takes place in the middle of the year, the buyer may pay a portion of the tax corresponding to the months he/she will occupy the property during that tax year.
It is essential to specify in the purchase contract who will assume this responsibility to avoid future disputes and ensure a smooth transaction.
How much does the IBI payment represent?
The amount of IBI is calculated according to the cadastral value of the property and the tax rate established by each municipality. The cadastral value is determined by criteria such as location, market value and the characteristics of the land and buildings.
Tax rates vary according to the nature of the property, ranging from 0.4% to 1.3% for urban properties and from 0.3% to 0.9% for rural properties. Payment can be made in person at authorized banks or electronically through the digital platforms of the city council or the Tax Agency.
What to do if the buyer refuses to pay the IBI?
If the buyer refuses to assume the payment agreed upon in the purchase contract, the seller faces possible consequences if he does not notify the municipality of the change of ownership. In this situation, the seller continues to be the taxpayer of IBI and is responsible for its payment, subject to fines and late payment interest.
In the opposite case, if the seller reported the change of ownership, the buyer becomes liable for payment. If you default, the municipality can seize the property to recover the amount owed, regardless of ownership.
