A deed of dissolution of jointly held property ownership (escritura de extinción de condominio) is a cost effective and tax efficient way for registered owners to re-arrange their combined property holdings.
Situations in which it might prove beneficial are:-
- Divorce or separation proceedings
- Re-arranging inheritances
- Re-arranging property holdings between friends and families
The procedure is relatively simple and straight forward and results in significant savings in both tax payable and legal fees. It is merely a matter of going before a notary and re-registering the property in the name of the remaining owner.
A deed of dissolution of joint ownership attracts tax at only 1% rather than the standard rate of 7%. Also both parties are saved the administration burden of the 3% capital gains tax retention and subsequently waiting 6 to 12 months for it to be refunded.
As the transaction requires less in terms of a traditional conveyancing service then any quoted legal fee should be less than the standard 1% to 1 ½ % plus VAT normally quoted. For high value transactions it would probably be advisable to agree an hourly rate with an overall cap on the final fee.
If there is a mortgage attached to the property then it will also be necessary to obtain consent from the mortgage provider to release the outgoing owner from any on-going commitments.