By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of September 2017
NOTE: this blog post is copyrighted © 2007. Plagiarism will be criminally prosecuted.
Are you fed up with your partner? Did you know there is a special procedure in Spain to terminate property co-ownership which can save you up to 80% in taxes? Interested? Read on.
Most property owners are unaware there is a legal way that can be followed in Spain to re-arrange property holdings which can save co-owners a considerable amount in taxes. On buying resale property in Spain, a buyer is normally liable for Property Transfer Tax or ITP (which ranges between 7% to 10% depending on the region in Spain where the property is located). However, on following what is known as a “Dissolution of Joint Property Ownership” (DJPO, for short) a buyer only attracts 1.5% Stamp Duty.
Signing a deed of Dissolution of Joint Property Ownership allows joint owners to re-arrange their share on a property in a tax-efficient manner as it enables the outgoing joint owner to transfer his share to an existing co-owner legally waiving the extreme Property Transfer Tax and paying in lieu 1.5% Stamp Duty on the full property value. This results in average tax savings of up to 86%!
This service is suitable:
If the vendor is non-resident, a 3% retention is practiced on the outgoing share.
Example: Married couple own a property in joint names. One of them wishes to terminate the situation and sell his share to his ex-partner.
Property is worth €300,000. Husband only pays 1.5% on the full property value or €4,500 in lieu of 8% Property Transfer Tax. This amounts to a tax reduction of over 80%!
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Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.
2007, 2011 and 2.017 © Raymundo Larraín Nesbitt. All rights reserved.