Responsibility for Payment of IBI

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Len S
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Responsibility for Payment of IBI

Postby Len S » Tue Apr 24, 2018 12:35 pm

we are in the process of selling our property in Spain and have been informed that the owner of the property on the 1st January (us) is responsible for the payment of IBI for the full year by law. Is this correct?

Many thanks in anticipation.

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Re: Responsibility for Payment of IBI

Postby Unicorn » Tue Apr 24, 2018 1:22 pm

I sold a property recently and the purchaser paid the proportion of IBI remaining this year to me. Their lawyer said I will still receive the bills this year in August/September but not to pay them.

When I do receive them, however, I shall double check that they have been paid!

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Re: Responsibility for Payment of IBI

Postby AkoAko » Tue Apr 24, 2018 1:35 pm

Yes , its the same with car tax but with IBI the lawyer should make a pro rata retention to cover the portion of the bill prior to the purchase . You do right to check the bill is paid by the purchasers once issued as you could still be required to pay it all if not paid , once registered to the new owners future bills will be in their names although IBI bills go against a property but its still not nice to have an outstanding bill in your name and the Hasienda can intimately claim it from your bank account as it will also be shown against your NIE number on their records .

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Re: Responsibility for Payment of IBI

Postby Pamela1 » Tue Apr 24, 2018 1:40 pm

A year after we bought our property some offical turned up and told us that the last 10yrs of ibi were outstanding..We headed off to the office where our ibi payments are made..all paid up to date!..work that one out because i surely cant..

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Re: Responsibility for Payment of IBI

Postby Free at Last » Tue Apr 24, 2018 2:01 pm

I sold a property last year and bought another one shortly afterwards, and in both cases we agreed to split the IBI bill for 2017 proportionately. In the case of the one I sold, the buyers' lawyer witheld a sum of money to cover my share, and in the case of the one I bought, the vendor paid the bill once he received it, and I paid him my share via my lawyer.

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Re: Responsibility for Payment of IBI

Postby Miro » Tue Apr 24, 2018 7:01 pm

In 20 years in Spain I have always understood that the registered owner on January 1st is liable for the bill for the entire year (even though this made no sense, I just figured, that's Spain!) With every property we've bought and sold, including the last one we sold in May last year, we've gone by this rule. The (Spanish) buyer didn't object to us paying the full year, but since she rather strangely had said she would pay the plus valia, I guess she wasn't likely to!
However, recently I have increasingly come across mention of the current year's bill being split pro-rata - which would of course make far more sense, except that town halls so far seem incapable of issuing bills to owners only for the period for which they actually own a property. It's not made any easier by them not issuing bills until late in the year, either, and especially difficult if the seller is non-resident. But, as I said, that's Spain! Nothing seems to be black & white, so all I can say to Len (OP) is to make sure this and other issues are clearly agreed upon with the buyer before you get to the notary.
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Re: Responsibility for Payment of IBI

Postby Free at Last » Tue Apr 24, 2018 8:30 pm

The legal position appears to be that in the absence of an agreement between the vendor and the buyer to split the cost, the vendor is obliged to pay the IBI bill for the whole year in which it is sold.

http://www.abc.es/economia/abci-acabo-v ... ticia.html

Len S
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Re: Responsibility for Payment of IBI

Postby Len S » Wed Apr 25, 2018 1:53 pm

Many thanks everyone.
The next task is to convince all interested parties that as fiscal residents in UK we are not responsible for any Plus Valia liability. Wish us luck!

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Re: Responsibility for Payment of IBI

Postby Miro » Wed Apr 25, 2018 2:57 pm

Good luck with that!!
I don't actually think it's got anything to do with fiscal residency, but I do think the chances of a town hall chasing a non-resident overseas are low, and they're more likely to chase the new owner, saying they should have retained the amount due from the seller.
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Re: Responsibility for Payment of IBI

Postby chrissiehope » Fri Apr 27, 2018 10:36 am

Can someone please confirm Len's comment that non tax residents are not required to pay Plus Valia ? We have had an offer on our casa (finally !), and as we are all non resident (for tax or anything else) it would be useful to know about this.
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Re: Responsibility for Payment of IBI

Postby Free at Last » Fri Apr 27, 2018 10:49 am

No, it isn't the case that non residents who sell their property are not liable to pay plus valia. They are (unless, as in Miro's case, the buyer agrees to pay it). What normally happens in the case of non residents is that the buyer's lawyer withholds the amount of plus valia from the sale proceeds, to avoid the possibility of it remaining unpaid if the vendor leaves Spain, because if that happened it would eventually become the buyer's responsibility. I can confirm that that is what happened when a friend of mine sold her property a few weeks ago, she is non resident and the plus valia was retained by the buyers' lawyer.

However, she sold at a loss and the tax advisor who works with the estate agents she used is confident that the plus valia can be recovered (and said that it might not even be necessary for the buyers' lawyer to pay it to the Ayuntamiento, but I haven't heard yet whether that was the case - if it had to be paid and then reclaimed it will obviously take longer). That's because fairly recently the Spanish courts ruled that it was illegal for plus valia to be charged if the property was sold for less than the amount paid for it.

http://www.marbellasolicitors.com/now-y ... valia-tax/

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chrissiehope
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Re: Responsibility for Payment of IBI

Postby chrissiehope » Fri Apr 27, 2018 1:00 pm

Thanks FAL - that's what I thought, but then I saw the post & got confused (easily done these days ;-) )
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Re: Responsibility for Payment of IBI

Postby Len S » Fri Apr 27, 2018 2:23 pm

I am not an expert in such matters but I would refer you to Real Decreto Legislativo 2/2004, de 5 mars Articulo106. This reference was given to me by a colleague. May I suggest you research it yourself and let us have your thoughts. As I said I am not an expert, but am led to believe Blevins Franks have investigated the matter of Plus Valia and its application to non residents.

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Re: Responsibility for Payment of IBI

Postby Miro » Fri Apr 27, 2018 5:04 pm

Free at Last wrote:(...if it had to be paid and then reclaimed it will obviously take longer). That's because fairly recently the Spanish courts ruled that it was illegal for plus valia to be charged if the property was sold for less than the amount paid for it.
If it has to be reclaimed, I wouldn't hold my breath. Town Halls appear to be a bit of a law unto themselves (making up their own, and often totally disregarding actual laws).
Last year Torremolinos scrapped the existing subvención (discount) system for the IBI, replacing it with a new one based on household income & other criteria (supplied in writing by the town hall - such as being registered on the padrón at the time of the application). We submitted our application in May, which clearly met all the criteria, but had to pay the full IBI amount when the bill arrived a few months later (in our name still, of course), and then await their decision. Meanwhile, we had sold the property. The new owner then started hassling us to write to the town hall stating that we no longer lived in the town, as apparently they would not register her at her new address until we "de-registered". We were wary, but as she'd been good to us (paying the plus valia for example!) we obliged. Some time later, we received notification from the town hall that we did not meet the criteria for the subvención - which was clearly incorrect. Unfortunately, by the time we received this notification, it was already too late to contest it. No reason was given, but we can only assume we were rejected because their records now show we are not on the padrón - but we were registered on the padrón at the time of the application, and we did pay the full year's IBI. We lost a few hundred euros as a result. Hey ho, such is life. At least all that frustrating senseless bureaucracy is behind us now (and we gained far more by avoiding the plus valia!)
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Re: Responsibility for Payment of IBI

Postby Free at Last » Fri Apr 27, 2018 5:22 pm

Len S wrote:I am not an expert in such matters but I would refer you to Real Decreto Legislativo 2/2004, de 5 mars Articulo106. This reference was given to me by a colleague. May I suggest you research it yourself and let us have your thoughts. As I said I am not an expert, but am led to believe Blevins Franks have investigated the matter of Plus Valia and its application to non residents.
I've had a read through of Articulo 106 of Real Decreto Legislativo 2/2004, at your request, but all it consists of is the definition of a "passive subject" in the matter of property transactions - it does not, so far as I can see, include any reference to non residents not being obliged to pay the plus valia tax.

Perhaps Beachcomber or El Cid will give us the benefit of their knowledge in these matters.

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Re: Responsibility for Payment of IBI

Postby maureenscot » Fri Apr 27, 2018 5:36 pm

www.larrainnisbettabogadas.com has worked on these subjects and gives idiots guide to the law now and how to appeal

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Re: Responsibility for Payment of IBI

Postby Free at Last » Fri Apr 27, 2018 6:12 pm

Unfortunately, Maureen, that link doesn't seem to work.

I've found a Spanish legal article which mentions the Real Decreto Len refers to - but it also confirms that in the case of a non-resident vendor, the buyer (or their lawyer) retains the plus valia amount at the time of sale.

https://www.todoexpertos.com/categorias ... -residente

It would be pretty strange if, effectively, non resident vendors were in a more advantageous position than resident ones by not having to pay plus valia (they have to pay IBI, transmission tax and capital gains tax, so why would plus valia be different?)- All the work done over the last few years has gone into making sure there is a level playing field so that non residents are not treated less favourably (as in the EU ruling that they could not be excluded from eligibility for regional allowances against CGT) but I really don't think they have ended up being treated MORE favourably.

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Re: Responsibility for Payment of IBI

Postby Miro » Fri Apr 27, 2018 6:31 pm

I would agree with that.
I think maybe the issue of who is liable may have been confused with the recent law about not being charged plus valia in the event of selling at a loss. We did ask at our town hall about "who pays" (literally) the plus valia when the seller is non-resident (since we were doubtful about whether our buyer actually intended to pay it, although she had provided the private contract stating just that). They were a little coy in their reply - but basically implied that they would not chase a non-resident overseas for any unpaid plus valia, rather, the debt would be logged against the property and therefore the new owner in effect would become liable. But they did also, albeit rather vaguely, imply that the buyer might retain the amount due, in order to physically pay it. Except in our case, whoever was advising our buyer obviously forgot to mention that part to her. (The same "advisor" apparently told her that, being over 65, she was exempt from transmission tax on the purchase :shock: )

Of course, I actually have no idea (and no way of finding out, other than by asking her) whether she ever did pay it - and frankly, I don't care, either! Several years ago, we bought a property from non-resident sellers, and it never occurred to us to retain & pay the PV on their behalf - we assumed (maybe stupidly) that their lawyer would take care of it. We sold the property on within less than a year anyway, so I guess if it wasn't paid, we also passed the problem on to the next owners. It occurs to me (sitting here in the UK) that this question simply wouldn't arise in the UK, since the conveyancing lawyers on both sides (both probably charging less than their Spanish counterparts) would be duty bound to ensure all debts & liens etc. were resolved prior to completion.
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Re: Responsibility for Payment of IBI

Postby Free at Last » Fri Apr 27, 2018 6:41 pm

Miro wrote:
If it has to be reclaimed, I wouldn't hold my breath. Town Halls appear to be a bit of a law unto themselves (making up their own, and often totally disregarding actual laws).
I'm sure that just like everything else, different Ayuntamientos will be dealing with the question of plus valia not having to be paid (or being able to be reclaimed) in the event of property being sold at a loss in different ways.

Málaga City Council, for example, had already decided by May 2017 to stop collecting the plus valia tax in these circumstances.

http://www.laopiniondemalaga.es/malaga/ ... 31712.html

In the case of my own local authority, they introduced a new process for reclaiming the plus valia following the legal judgement, but what I don't know as yet is how long the process actually takes. When I find out from my friend whether the amount actually had to be paid over by the buyers' lawyer or not, and if she has to reclaim it, how long it is likely to take, I will update you. The tax adviser has already warned her that reclaiming the 3% retention in respect of CGT is likely to be a long drawn out process!

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Re: Responsibility for Payment of IBI

Postby Free at Last » Fri Apr 27, 2018 6:45 pm

Miro wrote:
Of course, I actually have no idea (and no way of finding out, other than by asking her) whether she ever did pay it - and frankly, I don't care, either! Several years ago, we bought a property from non-resident sellers, and it never occurred to us to retain & pay the PV on their behalf - we assumed (maybe stupidly) that their lawyer would take care of it. We sold the property on within less than a year anyway, so I guess if it wasn't paid, we also passed the problem on to the next owners.
If a property is bought and resold within the same year, then plus valia is not charged. I bought my new home last year from a Spanish vendor who had bought it only a few months earlier, and he did not have to pay - and nor did I, as the buyer!


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