LAND VALUE TAX PAYMENT IN A PURCHASE TRANSACTION

In a purchase transaction, it is common for the salesperson to ask if they should deal with the annual land value tax (IBI, in Spanish) payment when the operationtook place in the first months of the year.

Under the current regulations and according to the Administration, the law establishes that the payment of the annual IBI falls to the owner at the time the tax is generated, that is, on the first day of the year.

The Supreme Court, in a ruling of 2016, establishes that, in the absence of a pact agreeing otherwise, the seller who has paid the IBI may pass it on to the buyer proportionally to the time in which each of the parties has held the ownership.

In conclusion, our recommendation is that the seller and buyer agree to the proportional payment of the tax, in accordance with the Court’s ruling and common sense.


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