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V2035-16 11 May 2016 · SG de Tributos Locales Criterion in force
OTRO · extinción de condominio

Termination of co-ownership via adjudication with financial compensation is not subject to IIVTNU

A query was raised regarding whether the partial termination of co-ownership, in which two co-owners acquire a third party's share through financial compensation, is subject to the IIVTNU (Tax on Property Transfers). The DGT ruled that it is not subject to the tax because there is no transfer of ownership, but rather a formalisation of a pre-existing right.

The question raised

Whether this operation is or is not subject to 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 the real estate property to one or several co-owners, with the obligation to provide economic compensation to the others, does not constitute a transfer of ownership from either a civil or tax perspective. It is a mere specification or concretization of an abstract right already held by each co-owner. Therefore, the taxable event for the IVTNU does not occur. For future transfers, the period for calculating the increase in value shall be counted from the original acquisition of the property by the co-owners.

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