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V1001-18 18 April 2018 · SG de Tributos Locales Criterion in force
OTRO · iivtnu

IIVTNU not payable if dissolution of community of property is total, equitable and without compensation from other assets

A query was raised regarding whether the extinction of co-ownership over only certain urban properties, or the total dissolution of a community of property, is subject to IIVTNU. The DGT ruled that total and equitable dissolution does not constitute a transfer; however, if only certain properties are extinguished or if there are imbalances in value, it is considered a barter and is taxable.

The question raised

Taxation of the various options under the Tax on the Increase in Value of Urban Land.

The DGT's ruling

The dissolution of a community of property through the adjudication of assets in proportion to the ownership share does not constitute a transfer, but rather a mere specification of a pre-existing right, and therefore is not subject to the ITP/AJD. However, if the dissolution is not total (with the undivided interest subsisting over other assets) or if the adjudication is not as equitable as possible, it is considered a barter and must be taxed. Likewise, economic compensation for indivisibility does not constitute a purchase or a transfer.

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