In many cases, several people become co-owners of a property in Torrevieja or Orihuela Costa. This often happens after a divorce, a legal separation, or an inheritance. However, maintaining a shared property can lead to conflict when personal circumstances change. For this reason, the most efficient legal solution is the dissolution of joint property ownership.
What is the dissolution of joint property ownership?
It is a legal act through which the community of property is dissolved. In the first place, one of the co-owners transfers their share to the other. Consequently, the receiving party becomes the 100% owner of the home. In contrast to a standard sale, this is not a property transfer as such. Instead, it is a specification of a right that already existed.
Tax advantages compared to a sale
The main reason for choosing this procedure is the economic saving. Therefore, it is the preferred option for our clients due to the following points:
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Property Transfer Tax (ITP): A standard sale is taxed between 8% and 10% ITP. In contrast, the dissolution of joint property ownership is only taxed for Stamp Duty (AJD). This tax usually ranges between 0.5% and 1.5% depending on the region.
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Municipal Capital Gains Tax: This process is not subject to municipal capital gains tax. This is because there is no real change in the value of the assets being awarded.
The legal process and the mortgage
To formalize the dissolution, you must grant a public deed before a notary. Subsequently, you must register the change of ownership in the Land Registry.
Furthermore, if the property has a mortgage, it is essential to negotiate with the bank. The entity must accept that one of the debtors leaves the loan. This process is known as mortgage novation. Likewise, the owner who keeps the property usually compensates the other party financially. This can be done in cash or by assuming the entirety of the outstanding debt.
In conclusion, our firm Orihuela Solicitors can guide you through the entire process. We offer a quick and economical solution to divide your property. If you have doubts about the dissolution of joint property ownership, contact us for a detailed legal study.
