One of the important points when purchasing a property in Spain is to calculate and verify that the property is perfectly registered for Ibi (Council Tax) purposes.
IBI is a local tax, which is paid every year, and is calculated based on the cadastral value of the properties.
This is where two public entities such as the City Council and the Cadastre come into play.
The City Council is in charge of managing the liquidation, calculation, and payment of the tax, as well as collecting it for itself. In other words, the City Councils have as IBI as an important basis for their financing, and the exclusive power to collect this tax. Ther reason of this is because the central administration leaves/delegates this power to the City Councils so that they can be financed in this way. With which, it supposes an important, almost essential, source of financing on the part of the city councils.
The Cadastre, however, is a technical office in which each and every one of the properties that exist in Spain is registered. Whether they are plots, land, industrial buildings, residential buildings, apartments, etc.
As we say, the way to calculate the Ibi is based on the surfaces of the existing buildings on a property. And the way of calculation is following the formula: “The more built area there is in the property, the higher the amount of this tax will be.”
At this point, it is important to know that many of the buildings that exist in Spain have not been correctly declared for cadastre purposes.
The cadastre, although it sometimes acts autonomously registering on its own and updating the properties and constructions that exist in its territorial scope, in a great majority of cases, it does not detect new constructions, or extensions of the same, if these have not been duly declared by the owners.
For this reason, it is very common that, if the owner who has carried out an extension building work does not duly declare it to the cadastre, such entity will not be aware of said construction, with which, consequently, the receipt or Ibi tax that is being paid on this property is not correct.
That is, that owner will be paying less taxes than he/she should.
Therefore, if an inspection is carried out by the cadastre, it is very likely that these undeclared constructions will be analyzed and fined by the administration.
To this effect, in the case of property sales, it may happen that the buyer of a property in Spain has not been duly informed of the cadastre situation in which the property is. So, it may happen that this property is not duly registered in Cadastre. In these cases, in addition to the fine or sanction that the cadastre may generate in the future, you may find that Catastre requires you to pay the difference of the unpaid tax up to four years before the acquisition.
For this reason, and to avoid possible fines or sanctions by the administration, it is highly recommended to have all the existing constructions in a property registered, especially when acquiring them.
With which, require your lawyer to carry out the appropriate investigations to confirm the registration status of the construction that you are in the process of acquiring in the cadastre.