Many people approach us to ask about changing the ownership of a property in joint names to one name only. An example recently was a couple who had got divorced in the UK. The lady approached us and asked us to act for her, as her ex husband already had a solicitor. The agreement in their divorce agreement was that the Spanish property would go to her and the UK property to him. She was very concerned about the costs as she was responsible in the divorce agreement for the Spanish costs.
If she was buying another property in Spain, currently here would be a property transfer tax paid of 10% on the purchase of a property, but there is a legal method that can deal with the transfer and the property is only subject to payment of Stamp Duty in Spain at the rate of 1.5% of the total taxable value of the property or the purchase price of the property (paid by the co-owner keeping the property). Stamp duty varies per region (this is the Valencia region).
Besides the cost of 1.5% Stamp Duty in the Valencia region; if there is a mortgage the Bank has to agree, and they will have their fees for re-arranging the mortgage, which they advise directly. In the case of this lady, she supplied the Bank with all the paperwork they required and they agreed that the husband could be released from the mortgage. She had to pay notary fees, land registry fees, stamp duty, and legal fees. There was no plusvalía paid (land tax).
Most lawyers advise that if the person having their name taken off the deeds, is a non resident in Spain then the person keeping the property would have to retain 3% of the agreed price for the share of the property, as is usual, and pay this to the Spanish Taxman on account of any potential capital gain made. If they were a Spanish tax resident then they have to declare the gain made (if any) in their tax declaration. However, we have a legal way to avoid this 3% being withheld in most cases.
We have also had recently the case of two business partners that had decided to no longer own the property together and wanted to take off one name, and also two brothers who no longer wished to be jointly responsible for the property.
Sometimes both parties do not even wish to come to Spain and it is certainly possible to arrange this without this being necessary as a Power of Attorney can be arranged in the home country for the solicitor to do all the paperwork and visit the Notary without the clients being present. If you would like to know more about this matter contact us.