BASQUE COUNTRY AND NAVARRE: Do you want to stop being a co-owner?

If you are a co-owner of a property and want to stop being one, you will have to reach an agreement with the other co-owners to terminate the co-ownership. In addition, they will have to decide which of the co-owners is awarded the property, and this person will have to compensate the others. Let's see how the termination of joint ownership is taxed.

Does it tax under the Property Transfer Tax modality?

No:

√ Although it seems that the termination of joint ownership meets the same requirements as a sale (there are sellers, a buyer, an object of transmission, and, generally, a cash payment); however, there is no actual transmission.

√ What exists is an individualization of shares, and the payment made by the acquirer of the property is compensation to the rest of the co-owners for their share in the community.

And by Documented Legal Acts?

Yes:

√ The termination of joint ownership is taxed under the gradual rate of Documented Legal Acts (0, 5%), as it meets each and every one of the requirements demanded for it:

• It is stated in a public deed.
• It has as its object a valuable amount or thing (the property).
• It is registrable in the Property Registry.
• It is not subject to Inheritance Tax, nor to the other two modalities of Property Transfer Tax.

√ The taxpayer is the acquirer of the property, that is, the person who ends up with the property.

√ Regarding the taxable base, since there is no specific rule for its determination beyond the generic rule of the "declared value" in the deed, the Supreme Court has interpreted that it is the part of the property that is acquired ex novo.

 

Our professionals will clarify any doubts that arise during the termination of your condominium.