According to our legislation no co-owner is obliged to live in community being able to request at any time the division. If the thing is divisible, there will be no problem, each one will be able to obtain what corresponds to him according to his participation quota. But if the thing is not divisible, or the co-owners agree that it be awarded to one, compensating the latter for theothers according to their respective quotas, or, it is sold and its price is shared. These, in summary and in broad strokes, are the options that the Civil Code foresees (arts. 400 y 404).

In everyday life we ​​find many examples of situations such as those described. Specifically, we will refer to that which occurs in the case of divorce in the regime of separation of property when the habitual residence has been acquired by both spouses. Let us imagine that they also do not have children and that they choose to take the procedure through the Court (they could have chosen to do it notarized) signing a regulatory agreement in which they will collect their personal and patrimonial relations, contemplating the extinction of the undivided property.

Before drafting the regulatory agreement, we must reflect on the tax consequences of the patrimonial decisions that are going to be adopted and reflected in it. In the case that I describe, since the home is undivided and, according to the solutions contemplated in the Civil Code, the spouses did not opt ​​for the sale to a third party, one of them kept the home, compensating the other financially in their participation fee. . When choosing this way of extinction of the undivided property, the assets of both spouses remain unchanged, due to the fact that the goods were already in their patrimony, in the case of a specification of ideal shares of co-ownership in a patrimonial element indivisible.

Having opted for the judicial route to collect the extinction of the condominium in an approved regulatory agreement, there would be no taxation for Documented Legal Acts since according to the Law of this tribute, arts. 27 y 28, will only be notarial, commercial and administrative documents, being subject to the deeds, acts and notarial testimonies, not finding ourselves, therefore, before any of these documents, would not be subject to this tax.

As I pointed out at the beginning, the extinction of the condominium does not imply a patrimonial transfer. This does not raise any doubts when the asset can be divided and each one gets their share, but it seems that when the asset is indivisible, this doubt reappears and can even lead the Tax Administration itself to try to tax the operation with the Income Tax. Asset Transfers, something that has recently happened to me. But as the 3rd Chamber of the Supreme Court in the basic Judgment on this matter, of June 28, 1999, in the case of the ITP, what is being determined is whether or not the taxable event has occurred, that is, a transfer in the event of division of an indivisible common thing with award to one of the condominium owners, a taxable event that does not occur because, as stated in that ruling, "there is no true transfer of assets, properly speaking, neither for civil purposes nor for tax purposes, but rather a mere concretion of a pre-existing abstract right." Therefore, it would not be taxed for this concept either, the taxable event of the tax does not occur.

As regards Personal Income Tax, the article 33.2 of the Tax Law understand that, "There is no alteration in the composition of the patrimony in the cases of division of common property, dissolution of community property, in the extinction of the matrimonial economic regime of participation and, in general, dissolution of communities or separation of community members”. With the previous Tax Regulation, approved by Royal Decree 2384/1981, of August 3, art. 79 stated that in these cases, "the goods and rights received by the taxpayer are incorporated into the patrimony for the same value for which the alienated or computed right would have been computed", so that if they were incorporated for the market value and not for the fiscally updated acquisition, it was understood that there had been an increase in assets that would have to be taxed in income, an increase that would be given by the difference between the fiscally updated value and the market value that was given to the property. However, the current Regulation (Royal Decree 439/2007, of March 30), does not provide anything in this regard, so I believe that it would not pay for this tax either (only in the event that it was awarded a value greater than its quota of participation), a conclusion reached by the Binding Consultation D.G.T. of November 4, 2013: “…the dissolution of the community of goods and the subsequent adjudication to each of the community members of their corresponding participation in the community does not constitute any alteration in the composition of their respective assets that could give rise to a capital gain or loss, as long as the adjudication corresponds to the respective share of ownership. Only in the event that assets or rights are attributed to one of the community members for a greater value than that corresponding to the share of ownership thereof, would there be a patrimonial alteration in the other community member, generating a patrimonial gain or loss. Consequently, based on the consideration that the property adjudication values ​​correspond to their market value and that the values ​​of the adjudication made correspond to the respective ownership quota, it is estimated that there would be no patrimonial alteration, otherwise in accordance with the provisions of article 33.2 of the Tax Law.” Again we have to conclude that it would not pay for this tax either.

Lastly, and as far as the Tax on Increased Value of Urban Land (Plusvalia) is concerned, taxation would not fit in the above case either, given that, by virtue of the provisions of Article art. 104 of the Law Regulating Local Treasuries, we are faced with a direct tax that is levied the increase in value that experience said lands and it becomes clear as a result of transfer of ownership of the lands by any title or of the constitution or transmission of any real right of enjoyment, limiting the domain, on the aforementioned lands. If, as we said, the division has a declarative and not a translational effect, because it does not attribute something that the community members did not have before and it does not produce any patrimonial benefit for them, since there is a proportional and equitable distribution of the assets existing in the community that is dissolved, respecting the participation quota that each one had, the subjection to the IIVTNU is not produced, a conclusion that is also reached by the Binding Consultation D.G.T. November 4, 2013 referred to above.

In short, the extinction of the condominium that the spouses have established over an indivisible asset, normally the habitual residence, judicially formalized by means of a regulatory agreement, DOES NOT TAX FOR ANY CONCEPT.

Esther Perez Escudero. Collegiate lawyer 1872 of ICAVIGO.