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IBI RECEIPT
One very important paper you must see before purchasing any second-hand Spanish property is the Impuesto sobre Bienes Inmuebles (IBI), the municipal real estate tax. When purchasing from the second or third owner, you must always ask to see the
latest paid-up receipt for the IBI before you sign any contract with the seller. If he doesn’t have it, you may find yourself liable for back taxes and penalties. Here again your lawyer or property consultant will have valuable advice. A new property bought from a developer will not have an IBI receipt yet and it will be your responsibility to register the property for this tax.
The IBI receipt will show the property’s catastral reference number and also your valor catastral, the official assessed value of the property This is a very important figure because various taxes are based on it. The assessed value is almost always considerably less than the real market value, but it has been steadily raised over the last few years.
Your annual real estate tax is charged by the municipality It can be as low as €120 if you own a small cottage in one of the typical villages, or as much as €2,000 a year if you own a new luxury villa on acres of land near Marbella.
A surcharge of 20 per cent will be placed on the bill if it is not paid on time. You can arrange to have this bill paid directly through your bank, in order to avoid forgetting it. You fill out the forms authorising the bank to pay it, and the tax people will send the bill directly to the bank. In many municipalities those who pay their IBI tax early get discounts of 10 per cent, and a standing order at the bank will ensure that this is done.
So when buying an older property, whether apartment or villa, you want to see the last IBI receipt. If not available, something is amiss. Really, you want to see the IBI receipts for the last five years, not just the current one, because you can be liable for five years of back tax.
The current IBI receipt must be presented to the Notary at the signing of the contract, because it contains the catastral reference number, but you as the buyer want to see it well before that.
Community fees, statutes and minutes of the AGM
If you are buying a flat, a townhouse, or a villa on an urbanisation, ask also to see the latest paid-up receipt for community fees. These are the fees charged by your Comunidad de Propietarios, the Community of Property Owners, which is the Spanish term for “condominium”, meaning the legal body that controls all the elements held in common. In a building this would be the lift, gardens and pool for example.
In an urhanisation, the Community as a whole jointly owns the roads, gardens, pool, lighting system and other elements as well. Each owner is assigned a quota, or percentage of the expenses, which he must pay, by law. See the section on Communities for full details. Just remember that you become a member of the Community, with legal rights and obligations, just by purchasing your property Only those who buy a country property or a house on a normal street in a town will not have to deal with Community problems.
The receipt for Community fees assures you that the fees are paid and gives you a good idea of your monthly charges in the future.
Read the Statutes, the regulations, of the community, too, as they will be binding on you once you have signed the purchase contract. If the basic Statutes that rule the Community prohibit the keeping of pets in the building or on the estate, you will have real problems if you want to keep your dogs, for example. Get a copy of these Statutes in a language you can read, even if the Spanish regulations are the only valid ones.
Then you want to see the Minutes Book, the official record, of the last Annual General Meeting of the Community Decisions are taken by majority vote of the owners at each year’s AGM, and these actions are recorded in the Minutes Book, which is an official document. If you find that the principal point at last year’s meeting was how to solve the Community’s chronic water shortage, then you will know you are going to have problems in your new house. Talk to the President of the Community if this is possible. A well-run Community can add thousands of euros to a property’s value, and a Community with problems is a source of endless aggravation.
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