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V0201-21 9 February 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · comunidad de bienes

Dissolution of a community of property does not generate capital gains if the ownership share is adjudicated

A query was made regarding the Personal Income Tax (IRPF) treatment of the dissolution of a community of property where one member acquires the entire asset by compensating the other. The Directorate General of Taxes (DGT) ruled that the dissolution does not constitute a change in assets if the adjudication respects each member's respective share.

The question raised

Treatment under Personal Income Tax (IRPF) of the dissolution of a community of property in which one of the co-owners acquires ownership of the entirety of the asset by compensating the other co-owner.

The DGT's ruling

The dissolution of a community of property does not constitute an alteration in the composition of the assets, provided that the adjudication corresponds to the ownership share of each co-owner. In this case, there is no capital gain or loss, and the assets retain their original value and acquisition date. If assets are adjudicated at a value higher than the ownership share, an alteration in the assets will occur for the other co-owner, generating a gain or loss regardless of whether there is cash compensation.

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