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V2713-20 4 September 2020 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ITPAJD · disolución de comunidad de bienes

Dissolution of joint ownership over an indivisible asset is subject only to Stamp Duty

A taxpayer seeks to dissolve joint ownership of a property by acquiring full ownership and compensating the other co-owner by assuming their mortgage loans. The Directorate-General for Taxes (DGT) rules that, if the asset is indivisible and compensation is made in cash, the transaction does not constitute a transfer for value but is instead subject to Stamp Duty (Actos Jurídicos Documentados).

The question raised

Taxation of the operation.

The DGT's ruling

The dissolution of a community of property that does not carry out business activities, where one co-owner is allocated the asset by compensating the other in cash, is taxed solely on documented legal acts. To apply this exception, the asset must be indivisible or lose value upon division, the allocation must be to a single co-owner, and the compensation must necessarily be in cash. The tax base shall be the value of the portion of the real estate whose participation ceases and is acquired by the other co-owner.

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