Cancellation of new construction and horizontal division is not subject to variable AJD

The Directorate General of Taxes (DGT) has issued a relevant ruling regarding the taxation of public deeds intended for the cancellation of new construction and horizontal division declarations. This pronouncement clarifies the nature of these documents regarding Transfer Tax and Stamp Duty (ITPAJD).

What the DGT has resolved

The inquiry raised whether the deed for the cancellation of new construction and horizontal division declarations should be subject to the Stamp Duty (AJD) levy. Following the analysis, the DGT has determined that this document is not subject to the variable AJD fee.

For a notarial document to be taxed under the variable fee, four requirements must occur simultaneously:

• Being the first copy of a notarial deed.
• Being registrable in the Property Registry.
• Having valuable content.
• Not being subject to other modalities of ITP or ISD.

In this specific case, the administration concludes that the deed for the cancellation of the new construction and horizontal division declaration does not meet the requirement of having a valuable amount or thing as its object. Lacking this essential element, the obligation to pay the variable fee of the tax is not triggered.

What it means for you

This criterion has a direct impact on the real estate sector and asset management. For companies engaged in real estate operations, this pronouncement provides legal certainty regarding the costs associated with the regularization of their properties. Likewise, it affects individuals who must carry out horizontal division cancellation procedures for their properties, by confirming that there is no obligation to pay the variable AJD fee in these types of acts.

What should be done

When faced with the need to formalize horizontal division cancellations, it is necessary to verify that the nature of the act strictly conforms to the DGT's ruling. Since the exemption from the variable fee depends on the absence of valuable content, each situation must be analyzed to ensure that the documentation presented before the notary and the tax administration is correct. It is recommended to assess each particular case to confirm that the deed does not incur other modalities of taxation.