The IBI, or Property Tax, is a key municipal levy in property transactions. Learn what it is, how it’s calculated, and who is responsible for paying it during the sales process.
To sell a property, it’s necessary to present the IBI payment receipt at the notary. But what exactly is the IBI? Who should pay it: the buyer or the seller? Let’s go step by step…
What is the IBI?
The IBI, or Property Tax, is a municipal tax that taxes the ownership of real estate, whether urban, rural, or of special characteristics. It is one of the main sources of income for municipalities. Although most properties are subject to this tax, some may benefit from discounts depending on local regulations.
How is the IBI calculated?
The calculation of the IBI takes into account two main factors:
- Catastral value: This is the value assigned by the administration to each property and serves as the basis for various taxes.
- Tax rate: This percentage varies by municipality, although the Regulatory Law of Local Treasuries establishes a maximum limit of 1.1% on the catastral value.
Many municipalities offer the option to pay the IBI in installments, making compliance easier.
When is the IBI paid?
The payment period for the IBI is determined by each municipality. If the municipality has an electronic headquarters, the fiscal calendar can usually be consulted there. For example:
- In Menorca, municipalities typically issue receipts during the summer period, except in cases where payment is split, in which case it depends on the specific fractions. Despite receiving the IBI statement halfway through the year, this tax corresponds to the entire calendar year (from January 1st to December 31st).
Who pays the IBI in a property sale?
In the context of a property sale, the seller is responsible for paying the IBI for the current year, even if the sale closes in January. It’s also important to note that the property is liable for the IBI for the previous 4 years. At the time of sale, the seller must prove payment for the last 4 years of IBI so that these amounts do not affect the buyer.
However, it’s common to agree on a pro-rata division of the IBI between the seller and the buyer, based on the time each will own the property during the year. For example, if the sale takes place in March, the seller would pay from January to March, and the buyer from March to December. This agreement should be reflected in the sales contract. Generally, the seller pays the entire IBI initially and then the buyer reimburses their corresponding portion.
How to request a copy of the IBI receipt?
If you need a copy of the IBI receipt and cannot find it, you can request it through the electronic headquarters of your municipality, using «citizen folder» if you have an electronic certificate. Otherwise, you will need to go to the town hall in person to obtain a duplicate.
Thinking of selling to buy another property?
At Portal Menorca, we guide you through the entire property sales process to ensure you make the best possible transaction, free from worries or stress. From preparing the property to signing the sales contract, including gathering all necessary documents, property valuation, filtering opportunities, conducting visits, and everything else involved in a property sale. Simply trust Portal Menorca.