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V2811-20 16 September 2020 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ITPAJD · comunidad de bienes

Dissolution of joint ownership without excess allocation is not subject to ITP or IIVTNU

Consultants inquired about the nature of their joint ownership communities and the taxation implications of their dissolution through horizontal division. The DGT clarifies that dissolution without excess allocation does not constitute a transfer of assets and therefore does not trigger taxation under ITP, IIVTNU, or IRPF.

The question raised

1.- Delimitation of the various independent and autonomous communities of property involved in the presented facts and whether the census declaration of communities of property A, B, and C entails their consideration as communities of property for the purposes of applying the Transfer Tax and Documented Legal Acts Tax. Furthermore, the criterion maintained by this Directorate General is requested regarding the factors that determine whether an item is indivisible or significantly loses value due to its indivisibility, in order to apply the exemption from liability under article 7-2-B of the consolidated text of the aforementioned tax to any possible excesses in adjudication with compensation that may eventually occur.

The DGT's ruling

The dissolution of a community of property through the adjudication of assets in proportion to the ownership share is not a transfer of assets, but a mere specification of a pre-existing right. To avoid liability for Transfer Tax (ITP) and the Tax on Property Transfers and Legal Documented Acts (IIVTNU), the dissolution must be total, without avoidable excesses in adjudication and without compensating such excesses with assets from a different community. If excesses in adjudication exist, these shall be taxed according to their nature (onerous or gratuitous).

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