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V4678-16 4 November 2016 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ITPAJD · comunidad de bienes

Dissolution of two separate joint ownerships cannot be achieved through exchange of shares without being taxed as a barter

A taxpayer inquired whether it is possible to increase the value of one property and decrease another to extinguish two separate joint ownerships without any compensation or gains. The DGT ruled that, as these are two distinct joint ownerships, the undivided shares cannot be exchanged without the transaction being classified as a barter subject to Transfer Tax (ITP).

The question raised

First question raised. Whether it would be possible to increase the value of one of the dwellings and decrease the value of the other, such that the total value of both remains the same, for the purpose of carrying out the extinction of the co-ownership in such a way that no economic compensation is required for the parties nor is any gain or loss generated for them.

The DGT's ruling

The existence of two communities of property with different origins requires treating the dissolution as two separate legal transactions. If the co-owners exchange their undivided shares, the operation constitutes a barter subject to the onerous transfer of assets modality of the ITP and AJD. If they are dissolved separately, the adjudication of an indivisible asset will generate an excess of adjudication that will be taxed under Inheritance and Gift Tax (if there is no compensation) or under Documented Legal Acts (if there is).

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