Two brothers seek Change of Ownership of Property
We received this enquiry:
“Hi, I am seeking advice on behalf of my boyfriend. He bought a property in May of this year, in Spain. He paid for the property himself at a cost of 250,000. The names on the house deeds are in both his and his brother’s name. His brother no longer wants to proceed forward with the house and my partner wants his name removed from the deeds so that it is solely his house. His brother has spent 15,000 euros on renovations and wants that paid back to him. He is willing to pay the 15,000 but wants to transfer the house deeds as cheaply as possible because of the expense in paying 15,000 to his brother. Their relationship is not exactly amicable. We heard of the ‘donacion’ but understand that that will cost a lot due to tax and we have heard of making a Spanish Will making him a beneficiary but not too sure on that option. I also heard it can be done as special deeds of transfer but don’t know what that means. Please could you advise on our options.”
There are several options:
- The brother making a Will to leave the property to the boyfriend (his brother), which is cheap but risky as it could be altered at any time.
- Adonation or a lifetime inheritance but tax is paid on this at the same rates as an inheritance in the Valencian region and on a property this value would be high
- An extinction of condominium or change of ownership.
In order to check if the extinction of condominium is cheaper than the donation we needed some documents: title deed of the property and SUMA. In this case, as the brother would not get a tax free allowance for a donation, donation tax would be much higher than for a dissolution of ownership. The taxes on a dissolution of ownership are only 1.5%, plus there would be also Notary fees, Land Registry fees, Solicitor´s fees.
In this case, it was cheaper to do an extinction of condominium by way of a special deed of transfer prepared by the lawyer than a donation of the property to the brother.
We calculated the expenses based on the documents, and explained to the clients so they could take a decision.