Last October, the Supreme Court ruled that selling your part of the property to your future ex-partner, or more technically than: the sale of part of a property to the other party is taxed as a capital benefit in personal income tax.

This operation is very common in divorce proceedings or when various co-owners decide to end this situation and decide to sell the part of one of the owners to another in exchange for money.

Selling your part of the property to your future ex-partner

Well, in October the high court has ruled that in this operation the person who does not keep the property and receives the cash compensation has to pay it as a benefit in personal income tax. At this point, the Treasury considers that if the value of the property at the time of dissolution is higher than it was when it was purchased, there is an equity benefit and therefore this must be recorded and taxed in the IRPF.

As has been customary in recent years, this is another blow to taxpayers since it has been established as a doctrine that:

“the compensation received by a community member, to whom the asset is not awarded when the condominium is dissolved, will entail for said community member the existence of a capital gain subject to personal income tax, when there is an update of the value of that asset between the time of its acquisition and that of its adjudication and that difference in value is positive.”

Example:

Nerea and Iker bought a flat on the outskirts of Barcelona worth 100,000 euros, and each owned 50%.

Years go by and Nerea is up to C0%·O with Iker, he in turn only has eyes for a friend from work.

Since Nerea lives across the street from work and has been there for 7 years, they decide that Nerea is going to buy the part from Iker.

Here comes the matter.

The apartment was bought 7 years ago for a value of 100,000 euros.

The price of the area has gone up and now the market price of this apartment is 175,000 euros.

If these numbers are taken, now Nerea has to pay Iker 87,500 euros.

If the apartment was paid for – compared to the 50,000 euros that the property was worth at the time of purchase.

It is precisely this change in the value of the assets that the Treasury will consider as an asset benefit and therefore must be recorded in the personal income tax.

Is it possible to do this without updating the value of the property?

The quick answer is, yes.

The real answer is, it can only be done with properties for which it is possible not to update the value, that is, that have been recently purchased. It is the only nail that someone can hold on to, but it is going to burn with a high probability.

And, be careful, Nerea is not going to settle for charging less money for that personal income tax.

If Iker is smart he will take it into account when agreeing with Nerea.

Things and the Spanish system is one of those that exerts the most fiscal pressure on its citizens. Ineffective governments and mounting debt make the tax burden tremendous on all sides.

Attention with selling your part of the property to your future ex-partner

So, if you are in the process of divorce, keep this article in mind when agreeing with the other party.

Because it is very possible, if not certain, that when it is your turn to file the income statement.

The treasury will consider that it is money that you have already paid for your part of the mortgage.

They now give you, jointly, the increase for reasons of market value.

This is considered that this is a benefit and therefore you have to pay a little for it.

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