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V2614-19 24 September 2019 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ITPAJD · segregación

Cancellation of previous land subdivision is subject to variable rate tax, but cancellation of new build status is not

A developer sought clarification on whether a deed to nullify a land subdivision and a 2006 new build declaration was subject to ITP and AJD taxes. The DGT ruled that the cancellation of the subdivision is subject to the variable rate, whereas the cancellation of the new build status carries no taxable value and is therefore not subject to tax.

The question raised

Whether the public deed by which a previous deed of segregation and declaration of new construction granted in 2006 is rendered ineffective, cancelling the resulting registry entries and causing the initial parent property to be liable for the entirety of the mortgage loan, is subject to Transfer Tax and Documented Legal Acts Tax. And, if subject, what would be the tax base, the taxable person, and the applicable rate.

The DGT's ruling

The transaction contains two distinct conventions that are taxed separately. The cancellation of the segregation of a property is a registrable act with valuable content, and therefore is taxed under the variable rate pursuant to Article 31.2 of the TRLITPAJD. Conversely, the deed for the cancellation of the declaration of new construction and horizontal division lacks valuable content as there is no new construction whose real value can be considered, and therefore it is not subject to the variable rate of Documented Legal Acts.

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