Selling a Property with IBI Debt: Who Pays?

Who is the taxable person for IBI before the local authority?

To understand the legal assignment of payment, one must look to Article 63 of Royal Legislative Decree 2/2004 of 5 March, approving the consolidated text of the Local Regulatory Tax Law. This regulation categorically establishes that the taxable person for IBI is the natural or legal person holding ownership rights over the property as of 1 January of the corresponding calendar year.

This implies that, from a strictly tax and administrative perspective, the Town Hall or corresponding local tax collection agency will issue the full tax bill for that year to whoever was recorded as the owner on the first day of the year. Therefore, if the sale of the property is completed in May, the tax authority will demand the full amount of that year's receipt from the seller, given that they were the owner on 1 January.

However, this obligation towards the tax authority does not prevent buyer and seller, under private law, from agreeing a proportional apportionment of the tax based on the period during which each holds ownership of the property during that tax year.

Supreme Court case law on IBI apportionment

For years, discrepancies existed regarding whether the seller had the right to demand from the buyer the proportional share of the IBI from the date of completion until the end of the year. Supreme Court Ruling 405/2016 of 15 June established clear criteria in this regard and clarified the civil relationship between the parties.

The Supreme Court ruled that, unless the parties expressly agree otherwise in the deposit agreement or public deed, the seller has the right to pass on to the buyer the fraction of the IBI equivalent to the period during which the buyer owns the property within that same tax year.

In standard practice, if a sale is signed before a notary on 1 July, the seller will have been the owner for six months and the buyer for the remaining six months. Unless explicitly agreed that one party assumes the full amount, the tax cost is split 50/50. However, as far as the local council is concerned, the sole formal debtor remains the owner as of 1 January. For this reason, the most common mechanism is for the buyer to pay their share to the seller at completion so the seller can settle the tax with the local authority.

The real charge on the property due to unpaid IBI

One of the greatest risks when selling a property with unresolved IBI debt from previous years lies in the legal concept of the real charge (afección real), set out in Article 78 of the General Tax Law.

This legal provision stipulates that transferred assets and rights remain directly attached to secure the payment of tax liabilities burdening their ownership. In the specific case of IBI, the property secures unpaid tax debts corresponding to the year in which the transfer takes place and the immediately preceding year.

This statutory charge carries specific consequences for the buyer:

• Risk of transfer of liability: If the seller accumulates IBI debts for the years permitted by law and the tax authority exhausts recovery proceedings against their personal assets without obtaining payment, the local council can initiate liability transfer proceedings against the new owner.
• Possibility of seizure: The municipal tax authority retains the power to execute a charge or seizure against the property to recover unpaid bills, regardless of whether the current owner was the legal titleholder when the debt arose.

Due to this legal attachment, notary legislation requires the notary to request proof from the seller that IBI payments are up to date or to request a cadastral certificate. If outstanding receipts are identified, the buyer usually demands prior settlement or a retention of the required amount at completion.

Steps to safely sell a property with IBI debt

Completing a property transfer when there are outstanding amounts for this tax is a common procedure. To carry out the operation with full legal protection and without delaying completion, the following steps should be taken:

1. Obtaining a municipal debt certificate

The owner must contact the tax office of the relevant Town Hall (or delegated tax collection authority) and request an official debt status certificate for the property. This official document will detail whether the tax bills are in the voluntary payment period or subject to executive recovery proceedings, setting out the principal amount, costs, enforcement surcharges and accrued interest.

2. Retention agreement in the purchase deed

This is the most common method when selling a property with IBI debt. At completion before the notary, the buyer deducts the exact amount owed to the Town Hall from the agreed purchase price. With this retained sum, the buyer or an appointed administrative agency (gestoría) settles the debt with the local council and obtains the final discharge certificate.

3. Settlement using deposit agreement funds

Another valid option is to use funds received as a deposit or reservation payment to settle the tax debt prior to executing the public deed. Once paid, the seller presents proof of payment for the payment notices issued by the Town Hall at the notary office.

4. Formalising the apportionment and agreements in the public deed

The notary will explicitly record the administrative status of the current year's IBI in the public deed of sale, reflecting whether the tax has been apportioned between the parties or assumed in full by one of them.

Special cases: Official Protection Housing (VPO) in Comunidad de Madrid

When selling a social housing property (VPO) with outstanding tax debt in Comunidad de Madrid, additional administrative requirements must be met.

In Comunidad de Madrid, to transfer a VPO property that remains under its protection period, it is mandatory to apply for the relevant sales authorization or voluntary disqualification (descalificación) from the Regional Housing Department (Dirección General de Vivienda). Furthermore, the sale price must strictly adhere to the legal maximum prices set by regional regulations depending on the property's protection scheme.

The existence of unpaid IBI does not prevent initiating administrative procedures for authorization or descalificación in Comunidad de Madrid. However, before executing the public deed of sale and registering it with the Land Registry, all tax charges burdening the protected property must be fully cleared, ensuring a clean title transfer.

Enforcement notices and executive seizures for unpaid IBI

If the IBI debt is not settled within the voluntary payment period, the local council initiates enforcement proceedings by issuing an enforcement order (providencia de apremio). If non-payment continues, the local authority may place an administrative charge or seizure on the property, recording the corresponding caution (anotación preventiva) at the Land Registry.

The existence of a seizure entry due to IBI surcharges does not legally prevent the sale of the property, but it requires a formal cancellation procedure. In this scenario, it is essential to request an updated payment demand from the tax collection agency as of the completion date. At completion, the outstanding principal plus surcharges and default interest will be retained to clear the charge and subsequently apply for the removal and cancellation of the registry entry.

Professional management of property sales with encumbrances

Handling the transfer of a property with tax debts or other financial encumbrances requires prior legal analysis to ensure the transaction concludes without future liability for any of the parties involved.

At Sky Real Estate, our legal and real estate team specialises in resolving properties with complex debts. Our standing in the legal sector has been recognized with the Sky Law European Legal Awards in 2023, 2024 and 2025. Furthermore, we are registered as Real Estate Credit Intermediaries in the official registry of Banco de España under code ICI D-286, enabling us to structure financial operations and handle mediations with creditor entities and public administrations.

If you wish to process the sale of a property with tax debts, arrears or registry encumbrances, our team can coordinate the entire technical and legal process. You can find more detailed information about our specialised services by visiting our section on selling a house with debt or mortgage.