Vendors can pass on pro rata share of council tax to buyers

Buyers can pass on the buyer’s pro rata share of annual local taxes even without a formal agreement, in the light of a recent ruling by the Spanish Supreme Court.

Council tax or local rates, known in Spain as the Impuesto de Bienes Inmuebles (IBI), are paid annually by all property owners to municipal authorities.

Up until now, vendors had to pay the whole year’s IBI in the year of sale, unless the buyer had explicitly agreed to pay the share corresponding to the new owner. IBI was a liability for whoever was the owner of the property on the first day of the year.

However, from now, in the light of a recent ruling by Spain’s Supreme Court, vendors can pass on IBI costs to buyers pro rata, even without any agreement prior to the sale. An extra cost for buyers but good news for vendors.

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