When you own a Gran Canaria property, you pay an annual tax to the local town hall called the Impuesto sobre Bienes Inmuebles (IBI).
The exact amount depends on the size of the property and the land value. Each ayuntamiento sets a rate between 0.4 – 1.1% of cadastral value per annum. The Las Palmas IBI is currently 0.67% of cadastral value.
You pay IBI annually which causes some confusion during property sales. Is it the seller or the buyer who is responsible for paying it during the year of a sale? Or should the two parties split the cost?
By law, the owner of a property on January 1st pays the IBI for the whole year. The bill therefore comes in their name.
The Spanish Supreme Court ruling
However, a Spanish Supreme Court ruled back in 2016 changed how payments work. It ruled that the seller can make the buyer pay the IBI for the period of the year that they own the property.
For example, if you buy in March, the seller pays the first quarter of the IBI. Then, the buyer pays the remaining three quarters.
The seller can oblige the buyer to pay their share of the IBI bill without putting it in the sale contract.
A buyer can negotiate not to pay any IBI with the seller. However, this agreement must be in the final contract to be valid. In practice almost all buyers and sellers agree to split the IBI bill.
- If the bill is direct debited, The buyer pays their share either in cash or it can be added to the total sale price. Then the seller pays the IBI for the year by direct debit when it comes due.
- If the bill is not direct debited, the seller gives their share to the buyer who then pays the complete IBI bill when it comes due.
Paying you IBI bill is important
Since any unpaid IBI bill remains attached to the property, buyers must pay the IBI bills on their property. Do this at the local town hall. I recommend setting up a direct debit at the town hall.
A town hall can theoretically impound a property and sell it in order to reclaim the unpaid tax. Non-residents can’t pay their non-resident income tax bill without an up-to-date IBI receipt.
As a Gran Canaria property buyer you don’t need to worry about unpaid IBI bills. The Notary checks it prior to to the day of your purchase.