Extinguishing a Tenancy (or Division of Tenancy) in Common on a Property

Many clients ask us about a jointly owned property being transferred to one person only. Occasionally, we are also asked about a property in one person´s name being transferred to another person, without incurring the taxes for a purchase and sale.

There is a way this can be done legally as part of a divorce agreement as a division of/ or extinguishing a tenancy in common or dissolution of joint ownership, with lower taxes than a purchase and sale or a donation.

In England and Ireland there is the concept of  tenancy in common, and so if someone is married, even if property assets are not in both spouses names, there is the concept of rights to part of those assets on the part of the spouse not named as owner, which would be the division of a tenancy in common of the properties.

Spain does not have this concept, but if a divorce/separation agreement is from the UK or Ireland, we can prepare a deed to transfer the property by a division of tenancy in common based on that. Thus stamp duty would only be 1.5% on the outgoing share in the Valencia region currently. Donation taxes range from just over 7% to 34% depending on the value of the property, and a purchase and sale are expensive in taxes.

Under Spanish Law, the person keeping the property pays the stamp duty and land registry fees. The other costs can be agreed between the parties.

There are possible risks with this procedure regarding taxes in the future and we would explain these.

We would require a divorce agreement stamped and signed by the Courts (by the Judge on each page) and a Hague Apostille by the foreign office on the divorce agreement. We will also need the Absolute Decree, it means, a document from courts confirming this agreement was submitted to courts and accepted, so the separation has been completed. Please contact us if you would like to make an enquiry.

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Feel free to get in touch with any enquiries and one of our friendly members of staff will get back to you as soon as possible.

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