Exclusive use of property among co-owners: taxation of the payment made

Shared ownership of a property can lead to situations where one of the co-owners uses the home exclusively, providing economic compensation to the other owners. This practice raises doubts about the tax nature of such amounts and the obligation to pay tax on them.

What the DGT has ruled

The Directorate General of Taxes (DGT) has determined that the amount a co-owner pays to the other owners constitutes income from real estate capital (rendimientos del capital inmobiliario) for the latter, in accordance with Article 22 of the Personal Income Tax (IRPF) Law. However, for the co-owner making the payment, this operation does not generate income or a capital gain. The Administration maintains that there is no simultaneous debt and right to collect in the same person that could result in a payment to oneself, which excludes the possibility of the taxpayer having to pay tax on this concept.

What it means for you

If you are a co-owner of a property and you use the asset exclusively through an economic compensation agreement, you should take the following into account:

• For the recipient: Payments received from the other co-owners must be included in the IRPF taxable base as income from real estate capital.
• For the payer: No capital gain or income is generated that must be declared in their own tax return, as one cannot be both debtor and creditor to oneself in this context.

What is advisable to do

In situations of co-ownership with exclusive use, it is necessary to formalize compensation agreements to avoid erroneous interpretations by the Administration. Each situation of shared property use presents particularities that require a technical assessment to ensure compliance with current regulations regarding IRPF and the Civil Code.