Dissolution of Joint Property Ownership

"Extinción de Condominio"

Dissolution of Joint Property Ownership

Dissolution of Joint Property (extinción de condominio in Spanish) is the prescribed procedure to acquire title to a property, when one of the co-owners wants to buy from the other.

It is very similar to a sale (and Capital Gains Tax applies the same), because there must be a payment, which in this case is named “compensation”, to be received by the co-owner who is leaving the partnership, but there are two significant advantages:

  • Instead of a 7% Transfer Tax, the “buyer” will only have to pay 1.2% on the value of the half of the property being transferred, rather than on the total value of the property.
  • Plusvalia tax does not apply

There are two requirements to be eligible for this advantaged tax regime when proceeding with a Dissolution of Joint Property, and it is highly advisable to take legal advice to make sure that everything is done properly:

  • The compensation received by the “seller” must be 50% of the declared value of the property (and for tax reasons this cannot be a “nominal value”, but should be a real market value)
  • And although it seems logical, the buyer must already been owner of a share of the property (otherwise this wouldn’t be a termination of co-ownership!)

If you are considering a Dissolution of Joint Property and would like to receive a no-obligation quotation for our services, we kindly request you to complete the following form. Please provide us with relevant information about your case, such as the value of the property and its location. Rest assured that we will promptly respond to your inquiry.

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