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V0928-23 20 April 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · extinción de condominio

The dissolution of co-ownership with economic compensation is taxed under documented legal acts and generates a capital gain or loss in Personal Income Tax

A taxpayer wishes to dissolve a co-ownership regarding an inherited apartment to retain 100% of the property by compensating their sibling in cash. The DGT responds that the operation is taxed under documented legal acts in the ITPAJD and that the compensation generates a capital gain or loss in the Personal Income Tax of the co-owner who transfers their share.

The question raised

Question posed: Taxation of the operation in the Transfer Tax and Documented Legal Acts Tax and in the Personal Income Tax.

The DGT's ruling

In the ITPAJD, the dissolution of a community of property without business activity resulting in the adjudication of an indivisible asset to a co-owner through economic compensation shall be taxed solely under the documented legal acts modality. The tax base shall be the value of the portion of the property being acquired. In Personal Income Tax, the adjudication of assets with a value exceeding the ownership share constitutes a change in assets that generates a capital gain or loss for the co-owner who transfers their share.

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