The extinction of condominium<\/b> between former spouses is a frequent situation after a separation or divorce, especially when there is only one common property, such as a house. In these cases, the award of the property to one of the ex-spouses with compensation to the other can generate significant tax effects. At Tecem Abogados<\/b>, specialized in tax and inheritance law in Malaga, Benalmadena and the Costa del Sol<\/b>, we advise our clients on the legal and tax implications of this type of transaction. <\/p>\n
What is the extinction of condominium?<\/b><\/b><\/p>\n
The extinction of condominium<\/b> is the dissolution of the shared ownership of a property between two or more co-owners. When one of the ex-spouses keeps the entire property and compensates the other, what is known as an excess award<\/b> occurs. This excess may be subject to different taxes, depending on how the compensation is made and the type of property involved. <\/p>\n
Case study: Extinction of condominium on a VPO<\/b><\/b><\/p>\n
A recent case resolved by the Directorate General of Taxes (DGT, CV 9-4-24)<\/b> deals with the extinction of the condominium on a subsidized housing (VPO)<\/b>. In this case, two ex-spouses were equal co-owners of a VPO with 30 years of protection. They decide to award the entire property to the ex-wife, who will compensate her ex-partner with half of the maximum value that the competent autonomous community has set for the property. <\/p>\n
Tax implications of over-allocation<\/b><\/b><\/p>\n
When there is an over-allocation<\/b> in favor of one of the co-owners, as in this case, the tax implications depend on several factors: 1.Taxation for Transfer of Property for Profit (TPO)<\/b>: The over-allocation would be subject to TPO<\/b>, except in those cases in which the property is indivisible or loses a lot of value with its division, as it happens with houses. In this type of situation, the excess of adjudication is not subject to TPO, in accordance with article 7.2.B of the Law on Transfer Tax and Stamp Duty (Ley del Impuesto sobre Transmisiones Patrimoniales y Actos Jur\u00eddicos Documentados, LITP)<\/b>.Documented Legal Acts (AJD)<\/b>: Although there is no transfer subject to TPO, the operation can be subject to the AJD<\/b> modality when it is formalized in public deed, provided that the awards are proportional and comply with the requirements established in the LITP, article 31.2.<\/b><\/p>\n
Compensation: key to taxation<\/b><\/b><\/p>\n
The way in which the compensation is made also affects the taxation of the transaction. According to the doctrine of the Supreme Court (SC 30-10-19, EDJ 720808)<\/b>, if the compensation is made in money<\/b> or by means of the delivery of other property that both ex-spouses share, the excess will not be subject to TPO<\/b>, but will be subject to AJD<\/b>. On the contrary, if the compensation is made through the delivery of another private property of the ex-spouse, the transaction will be considered an exchange<\/b> and will be subject to TPO<\/b>. <\/p>\n
Valuation of the house: the case of a VPO<\/b><\/b><\/p>\n
Regarding the valuation of the property for the determination of the tax base, the fact that it is a VPO<\/b> has implications. The market value is determined by the maximum sale price<\/b> set by the competent autonomous community, which cannot be exceeded by the reference value provided for in the cadastral regulations. This ensures that the valuation is limited by the regulations applicable to subsidized housing, and not by the free market value. <\/p>\n
Advice on condominium extinguishment and its tax implications<\/b><\/b><\/p>\n
At Tecem Abogados<\/b>, we offer a comprehensive tax and legal advisory<\/b> service for cases of condominium extinguishment<\/b> between ex-spouses. Our team of lawyers specialized in tax law will help you to understand the tax implications of the operation and to comply with tax obligations efficiently. We are at your disposal in Malaga, Benalmadena and all the Costa del Sol<\/b>, providing personalized advice for any type of operation related to the extinction of condominium, liquidation of community property or transfer of assets. <\/p>\n","protected":false},"excerpt":{"rendered":"
The extinction of condominium between former spouses is a frequent situation after a separation or divorce, especially when there is only one common property, such as a house. In these cases, the award of the property to one of the ex-spouses with compensation to the other can generate significant tax effects. At Tecem Abogados, specialized […]<\/p>\n","protected":false},"author":1,"featured_media":2331,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","rank_math_title":"Extinction of condominium on a house,malaga | Tecem Abogados","rank_math_description":"Extinction of condominium on a house malaga en M\u00e1laga con total garant\u00eda jur\u00eddica. Asesores especializados, resultados probados. Primera consulta gratis.","rank_math_canonical_url":"","rank_math_focus_keyword":"Extinction of condominium on a house,malaga"},"categories":[59],"tags":[78],"class_list":["post-2333","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-extinction-of-condominium"],"acf":[],"_links":{"self":[{"href":"https:\/\/tecemabogados.com\/en\/wp-json\/wp\/v2\/posts\/2333","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tecemabogados.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tecemabogados.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tecemabogados.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tecemabogados.com\/en\/wp-json\/wp\/v2\/comments?post=2333"}],"version-history":[{"count":1,"href":"https:\/\/tecemabogados.com\/en\/wp-json\/wp\/v2\/posts\/2333\/revisions"}],"predecessor-version":[{"id":2335,"href":"https:\/\/tecemabogados.com\/en\/wp-json\/wp\/v2\/posts\/2333\/revisions\/2335"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tecemabogados.com\/en\/wp-json\/wp\/v2\/media\/2331"}],"wp:attachment":[{"href":"https:\/\/tecemabogados.com\/en\/wp-json\/wp\/v2\/media?parent=2333"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tecemabogados.com\/en\/wp-json\/wp\/v2\/categories?post=2333"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tecemabogados.com\/en\/wp-json\/wp\/v2\/tags?post=2333"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}