Extinction of Condominium (EC) (or “Cancellation of Co-ownership”)  consists in the transmission of the ownership of an asset,  whcih cannot be divided, where one of the co-owners acquires the full ownership of the asset to the rest of the co-owners, and that ends , in numerous occasions, with a compensation (monetary or not). 

In which cases we find a “Condomininum” or “Co-ownership” on a property?

  • When 2 or more persons decide to buy a property together, and sharing the percentage of co-ownership
  • In case of inheritance, when it is confirmed that, by law, or by testament, the ownership from a determinate property is shared proportionally to the inheritors.
  • In other Court or Judicial process 

Usually, there are 2 ways to proceed with a termination of Co-ownership: 

1.- With a judicial agreement where it is considered by Tribunals where it is confirmed that the property will go to one of the co-owners only.

2 examples:

a) Divorce; In case of divorce, where there is a Court’s Sentence establishing that the property owned by a married couple goes to only one of them.

b) Official extinction of Co-owership at Courts. There could be other Judicial process where the co-owners is decided to be cancelled.

In both cases, the Court’s Sentence is presented in the Spanish system and it is used to open a process where only one of the co-owners will get the 100 % of the property.

2.- Agreement between parties: Selling one of the parts to the other party

It is always possible that one of the co-owners decides to buy or to sell its part to the other.

What is the main advantage of the Extinction of Co-ownership?

The main aspect of this transaction is directly related to taxes as, although one of the co-owners “acquires” the part of the co-ownership from the rest, from a tax point of view this transaction is not taxed as “a sale”.

Depending on the Spanish region, the “sale” is taxed from 6-10 % on the price of the sale. But the EC is taxed only at 0,5-1,5 % (depending on the regions)

This is the typical transaction done in case of divorce or separation.


“A” and “B” are married and buy an appartment for 150.000 EUR in Malaga. 2 years later, they decide to divorce, and they agree that “A” gets the apartament. “A” pays 75.000 EUR to “B” to acquire its part.

Being considered as an EC, taxes for this transaction  will not be 8 % (Andalucía Transfer Tax=6.000 EUR), but 1,5 % = 1.125 EUR.

Conclusion: “A”+”B” are saving 6.000 – 1.125 EUR = 4.875 EUR as this transaction is considered as a EC instead of a sale. 

So, the EC  is a perfect  option in case of divorce.

IMPORTANT!: But, in case that the property is charged with a mortgage, although the property can be fully acquired by the other party (“A”, in the case of the example), the bank may not accept to leave “B” out of the mortgage. If this happens,  though in the Land Registry “B” is out of the property, if the bank does not accept to cancel its mortgage responsibility, then “B” will continue being a person in charge of it and, therefore, it will continue being a debtor of the mortgage to the bank.

In order to avoid this undesirable situation, before taking the decision to leave the property to one of the co-woners, is important to get previous advice from your bank to see what would be the mortgage position of the party who leaves the property. This way, it is suitable to sign, first, the extinction of condominium, later, to proceed with the formalization of the new mortgage.

The subordination to taxation comes determined by the “monetary nature” of the compensation. In other words, to be considered as an Extinction of Condominium , so, in case of compensating with goods, it is understood that it is a “barter” (also known as “SWAP”) and then the transaction is considered as a “sale”, and taxed as a “sale”.

What’s the case is there is no payment to “buy” the other part, or there is no Judicial/Court’s Sentence? Could it be possible that one of the parties “give” or “donate” its part to the other?

This is possible, but it will not be considered as “Exntinction of Co-ownership” , so, it will not have the tax privileges of this concept. It will be considered as a “Donation”.

And, in case of “Donation”, then, we will have to be regulated by Donation tax, which is a regional tax, so,  differently regulated depending on the regions.

In case of Valencia region,  Donation has a bonification consisting in a free of tax up to 100.000 EUR from the amount donate between parents and sons. But, this bonification in taxes is nor applied in donations between spouses. So, in case of donation of part of the property owner to the other, being spouses, could derive in high tax amounts to pay.

Donation tax is even higher when co-owners are not married.

So, it is very important to get the proper legal advice when taking the decission to extinguish or disolve the Condominium or Co-ownership.

As explained EC where there is no payment can be considered as a “Donation”: A very important aspect from the EC is that there must be a “payment” or “compensation” to the other party. In other words, the one who is leaving the property must be “paid” or “compensated” by the one who gets the property. If there is not any payment, then, the transaciton may be considered as a “gift” and then the transaction may be taxed as a “donation”. And this is really important to be considered as a “donation” is taxed even higher than an inhertitance . “Donation Tax ” use to be the same as per “Inheritance Tax”, and donations bewteeen spouses do not use to have as much as reductions and benefits as per inheritance. 

An EC where the payment is with another asset may be considered as a “sale”: It is very important to know that when the compensation from the acquirying party is done using another asset, then, the transaction may be considered as a “SWAP”, and then, taxed as a “sale”.

In the Valencian Community, this option offers important fiscal advantage, so, the tax associated (Juridical Documented Act Tax) has attributed a 1,5 %, more notarial expenses, and, if the property of a part of a good is transferred in exchange for a compensation, fiscally it is preferable this option instead of purchase option, so, for the latter applies to itself a tax attribution of 10 % (in other regions this tax maybe 8- 10 %).

Finally, in the case of taxation of NON RESIDENTS,  in case there is not “excess of adjudication” there is not any 3 % to be retained from the partner who gives the part to the other.

But, in the extinctions of condominium with excess of adjudication and compensation in money, according to the article 25.2 of the consolidated text of the Law of the Income tax of not Residents, on the value of the excess there has to be practiced a retention of 3 % for the liquidation of this tax, providing that there has been a patrimonial alteration and update of the value of the building.


– Royal Decree of July 24, 1889.

– General Fiscal Management.

– Royal Legislative Decree 1/1993, September 24.

– Non Resident Tax Law.