Extinción de condominio, the Spanish procedure for ending joint ownership, is usually a good option when one of the co-owners wants to keep the house and can pay the others for their share. Selling to a third party works better when nobody wants or is able to keep it, or when everyone would rather have the money.
In this guide we compare both options using an example in Catalonia. We also explain what to bear in mind if the property was inherited by siblings, if it belongs to a couple who are separating or if one of the owners objects to every solution.
A condominio or proindiviso exists when two or more people share ownership of a property: 50% each for the members of a couple, a third per sibling, and so on. Each owns a share of the whole, not specific rooms.
When a house cannot reasonably be divided, extinción de condominio allows one person to keep the entire property and compensate the others financially. It is a way of ending joint ownership and can be treated more favourably for tax purposes than a sale.
Selling the house, by contrast, means transferring it in full to a buyer and splitting the price according to each owner's share. All owners must agree to that voluntary sale. If they do not, any of them can apply for the property to be divided, except in cases such as a valid agreement to keep it in joint ownership for a period of time.
| Aspect | Extinción de condominio | Sale to a third party |
|---|---|---|
| Who keeps the house | One of the co-owners | An outside buyer |
| Acquisition tax | AJD: generally 1.5% on the share acquired | Paid by the buyer |
| IRPF (income tax) | Whoever receives money may be taxed on the gain on their share | Each seller may be taxed on the gain on their share |
| Plusvalía municipal | Generally not, in the usual case explained below | May apply if the value of the urban land has risen |
| Money needed | Whoever keeps the house must pay the others and cover the costs | The owners receive their share, minus debts, costs and taxes |
| When it fits | Someone wants to keep it and can pay | Nobody wants to keep it or everyone prefers the money |
In the usual case of an indivisible house passing to a single owner, with fair compensation for the others, the tax payable is Actos Jurídicos Documentados (AJD), a duty on notarial documents. In Catalonia its general rate is 1.5% and it applies to the value of the share acquired, not to the whole house. You can read the explanation from the Agència Tributària de Catalunya.
You should also check the reference value set by the Spanish Cadastre (Catastro): if it is higher than the declared value, it can increase the amount on which the tax is calculated.
Extinción de condominio does not in itself avoid IRPF, Spanish income tax. If the house has gone up in value since it was acquired, whoever is paid for their share may have a gain to declare. The calculation takes into account the acquisition value, the compensation and the applicable costs and taxes. The Spanish Tax Agency explains this criterion.
Whoever keeps the property does not pay IRPF simply for receiving it. It is advisable to keep the title deeds and proof of payment, as they will be needed if the property is sold later.
In the usual case of a single house that cannot be divided and passes to one of its owners, who compensates the others for the value of their share, no plusvalía municipal (municipal tax on the increase in urban land value) is payable. The fact that money changes hands does not in itself change this treatment. If several properties are being shared out or the transaction is different, it is worth checking before signing.
Anna and Marc inherited a house in Palafrugell in 2016, then valued at €400,000: €200,000 each. It is now worth €600,000. Anna wants to keep it and Marc would rather have the money. These would be the differences between awarding the house to Anna and selling it to a third party at that price:
| Item | Anna keeps the house | Both sell the house |
|---|---|---|
| Acquisition tax | Anna: 1.5% of €300,000 = €4,500 in AJD | Paid by the buyer |
| Marc's IRPF | €21,880 on a gain of €100,000 | €21,880 on the same gain |
| Anna's IRPF | Pays nothing for keeping the house | €21,880 on the same gain |
| Plusvalía municipal | No, if the conditions explained are met | Must be calculated for each owner |
| Money Anna needs | €300,000 for Marc + €4,500 in AJD + other costs | Contributes no money to acquire Marc's share and receives her half of the sale |
Simplified example: house without a mortgage, tax value of €600,000 and both owners tax resident in Spain. IRPF is calculated using the savings income scale, with no other savings income, deductible costs, offsettable losses or exemptions. The taxes and costs in each case can change the result.
If Anna wants to keep the house and the transaction meets the requirements for an extinción de condominio, she would pay €4,500 in AJD. Compared with a sale of that half taxed at 10% transfer tax (Transmisiones Patrimoniales), which would mean €30,000 in tax, that is a saving of €25,500 in acquisition tax. To compare the full cost, they also need to factor in notary, registry and advisory fees and, if they sell through an agency, its commission.
If you want to keep the house you share with a sibling, it is worth looking at extinción de condominio before treating it as a sale. When the requirements are met, the acquisition tax is usually lower.
But simply changing the name on the deed is not enough to pay less. The notary must check what transaction you are really carrying out. Nor is it advisable to use the same arrangement if one of three siblings leaves and the other two continue to share the house, if several properties are being shared out or if someone receives less than their entitlement without fair compensation.
Selling the whole property is usually the most practical solution when nobody wants or is able to keep it. It allows you to look for buyers for the entire house, which is normally easier than selling a share on its own. Before deciding, work out how much each of you will be left with after these items:
Check the documents needed to sell a property in Catalonia. If you decide to sell, our guide on how to prepare your house for sale may also help.
Inheriting the family holiday home in Begur, Calella de Palafrugell or Pals can bring together siblings with different needs. One wants to keep using it, another needs the money and another can barely look after it. On top of the memories come decisions about IBI (property tax), repairs or who uses it in the summer.
Before awarding the house to all of you in shares, consider whether one of the heirs can take it directly and compensate the others. Raising this when organising the estate can avoid a second transaction later on. The ATC explains how the division of an estate is treated.
If you already own it in shares, you can agree for one of you to keep it through an extinción de condominio or sell it together. When there are several properties, it is sometimes possible to divide them into lots, for example a house for one sibling and a flat for another. This division should be studied in advance: it does not in itself guarantee that no tax will be due.
Dividing a masía (traditional Catalan farmhouse) or a rural estate is not always possible, even if it has enough land or several living areas. Planning and agricultural rules must be checked. If nobody can pay the others and division is not viable, selling the whole estate may be the alternative. You can see examples in our section of country houses for sale on the Costa Brava.
Where Catalan civil law applies and no other regime has been agreed, marriage is governed by separation of property. If you bought the house in equal shares, you remain owners of those halves after separating until you agree or it is decided what to do with them. It is advisable to review the deeds and the matrimonial property regime before taking anything for granted.
The division of the property can be dealt with as part of the divorce itself. In the case of a stable unmarried couple (pareja estable), it is also advisable to coordinate the division with the separation agreements. Depending on how the separation and the extinción de condominio are formalised, there may be 100% relief from AJD or no need to pay that tax. That is why it pays to organise everything together from the start.
The right to live in the house and ownership are different things. If one of you has been granted the use of it, for example by a family court ruling, this can make the sale harder and affect the price. It does not always prevent a sale, but that right must be respected for as long as it remains in force. It needs to be taken into account when negotiating.
It is possible to end the joint ownership of a mortgaged house. However, if you are both borrowers, one of you keeping the house and agreeing to pay the whole mortgage does not release the other from their obligations to the bank. The lender must expressly agree to that release.
Before signing, ask whether the bank will authorise it and whether the person keeping the house can finance the compensation. Ask for the full cost too: changing the borrowers on the loan can lead to additional costs and taxes.
If you cannot reach an agreement, you can ask the court to resolve the joint ownership. For a house that cannot be divided, Catalan law sets out the following order:
In addition, anyone holding at least 80% of the property can demand to keep all of it by paying the expert value of the other shares. Going to court adds costs and can delay a solution, so it is worth exploring a negotiated way out first.
You can sell your share without selling the whole house. If the buyer is someone outside the co-ownership, the other co-owners normally have a preferential right to buy it at the same price and on the same terms. You must notify them of the transaction in a way that leaves a record, unless that right has been validly excluded or waived.
Selling a share on its own is usually harder and may force you to accept a discount. Before choosing this route, compare what you would receive with what you could obtain by selling the whole property by mutual agreement.
Mediation can help when the disagreement mixes money, use of the house and family relationships. You can contact the Centre de Mediació de Catalunya. In addition, before bringing a civil claim, you generally have to attempt prior negotiation and be able to prove it. Your lawyer can tell you how to do this; it does not always have to be through mediation.
If, after doing the maths, you would rather sell, the first step is to find out what the property is worth. You can ask us for a valuation on our page to sell your house on the Costa Brava.
At Costa Brava House we help you value a shared house and, if you decide to sell, prepare and manage its marketing. For legal and tax matters we work with property legal services. If you have any questions about your property on the Costa Brava, get in touch with us.
This article is for information only. Before signing, it is advisable to review the taxes and the specific terms of the transaction with your adviser.
