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V2340-21 18 August 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
ITPAJD · disolución de comunidad de bienes

Dissolution of joint property ownership with equivalent lots is subject to Documented Legal Acts tax

Four sisters sought guidance on the taxation of land subdivision and the subsequent dissolution of a co-ownership through the allocation of equivalent lots. The Directorate General for Taxes (DGT) ruled that the subdivision is subject to Documented Legal Acts tax and that dissolution without excess allocation does not constitute an onerous transfer, but is instead taxed based on the notary document fee.

The question raised

Taxation under Personal Income Tax and under Transfer Tax and Documented Legal Acts Tax.

The DGT's ruling

The segregation of estates does not constitute a taxable transfer for consideration, but it does constitute a taxable event for documented legal acts. In the dissolution of communities of property, if equivalent and proportional lots are adjudicated according to the participation shares, there is no taxable transfer of assets for consideration, and it is taxed based on the rate for documented legal acts. If there are excesses in adjudication, these are taxed as transfers of assets or donations, as applicable.

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