If you own a property in Spain together with someone else, perhaps a former partner, a brother or sister, or the other heirs of a parent, there is a cheap and clean way to end that joint ownership. In Spanish law it is called extinción de condominio (dissolution of co-ownership). One of you keeps the property and pays the others for their share, or the properties are shared out between you. Done properly, it costs far less in tax than a sale.
I am Alberto Valiño Arcos, a Spanish lawyer and tax adviser (Valencia Bar no. 15042). Co-ownership dissolutions are my speciality: I have studied thousands of them and designed the tax strategy for hundreds. I work in English with clients who live outside Spain, and I can handle the whole process for you from start to finish, including the notary, the tax returns and the Land Registry.
Frequently asked questions
What taxes are paid when co-ownership is dissolved?
If it is planned correctly, the person who keeps the property pays only Stamp Duty (Actos Jurídicos Documentados, AJD) on the share they acquire, at the rate set by the region where the property is. No Transfer Tax (Transmisiones Patrimoniales) and no municipal capital gains tax (plusvalía municipal) are due. The person who leaves may owe tax on any gain, and this is where living outside Spain makes a real difference.
I live outside Spain. Will I pay tax on the money I receive?
It depends on where you are tax resident. Non-residents pay Spanish Non-Resident Income Tax (IRNR), and the law has two different rules for capital gains.
If you live in another EU or EEA country (Ireland, France, Germany, the Netherlands or Norway, for example), your gain is calculated under the same rules as a Spanish resident (article 24.6, rule 2, of the Non-Resident Income Tax Act). That means a division in proportion to your share, or the winding-up of a Spanish community of property between spouses, does not create a taxable gain, exactly as it would for someone living in Spain. You will need a certificate of tax residence from your country to prove it.
If you live outside the EU and the EEA, including the United Kingdom since Brexit, the United States or Israel, the law expressly excludes that rule (article 24.4 of the same Act). The Spanish tax authority takes the view that even the winding-up of a marital community of property can produce a gain taxed at 19% (binding ruling V5053-16). Planning matters even more in your case.
Does the person who keeps the property have to withhold 3%?
Yes, when the person leaving is a non-resident and receives payment for their share. The buyer of a Spanish property from a non-resident must withhold 3% of the agreed price and pay it to the tax authority on form 211 (article 25.2 of the Non-Resident Income Tax Act). The tax authority applies the same rule to a co-ownership dissolution in which the non-resident is paid off (binding ruling V1374-07). The 3% is a payment on account: the non-resident then files form 210 and either pays the difference or claims the excess back.
If the 3% is not paid, the property itself remains liable for it, which can cause problems later when you sell or remortgage.
Is there municipal capital gains tax (plusvalía municipal)?
No, when the property cannot reasonably be divided and the person who keeps it compensates the others in money. The Spanish tax authority accepts this (binding ruling V3029-23). The tax is deferred until the property is eventually sold. Between spouses, transfers made under a divorce or separation judgment are also outside the scope of this tax (article 104.3 of the Local Finance Act).
What if the person keeping the property takes over the mortgage?
For tax purposes, taking over the other owner’s share of the mortgage counts as paying them, just as if the money had been paid in cash. The Supreme Court has accepted this and the tax authority follows it (binding ruling V1696-23). The bank is a separate matter: the departing owner is only released from the mortgage if the bank agrees, so that conversation should happen before anyone signs.
We own more than one property in Spain. Does that change anything?
A great deal. First we need to work out whether you have one co-ownership or several, which depends on how each property was acquired (an inheritance, a joint purchase, and so on). With several properties it is often possible to share them out in balanced lots, so that each of you receives value in proportion to your share. The Supreme Court has also accepted that one owner may keep several properties and compensate the other partly in money and partly with other assets (STS 1502/2019, 30 October).
What value should be declared? Does the cadastral reference value matter?
For Stamp Duty, the cadastral reference value (valor de referencia) is the minimum: if you declare less, the tax will be calculated on the reference value of the share acquired (article 30.1 of the Transfer Tax and Stamp Duty Act). For the departing owner’s gain, what counts is the amount actually received, provided it is not below market value. Declaring a low value without good reason has another risk: Spain may treat the difference as a gift.
Do we have to travel to Spain to sign?
No. You can sign the deed yourself at a Spanish notary or give a power of attorney so that someone signs on your behalf. A power granted abroad has to be legalised with the Apostille and, if it is not in Spanish, translated. You will also need a Spanish tax identification number (NIE). I can tell you exactly what to prepare in your country before you sign anything.
What if the joint ownership comes from an inheritance or a divorce?
If the estate has not yet been divided, the right route is usually the partition of the inheritance rather than a co-ownership dissolution, and it tends to be cheaper. In a divorce, the result depends on the matrimonial property regime and on whether the property is allocated in the court-approved divorce agreement, which can avoid Stamp Duty altogether. Both cases need to be looked at before signing, because the order in which things are done changes the tax bill.
How I can help
I study your case, tell you in writing which structure costs least in tax and why, and then coordinate everything: the notary, the withholding and tax returns, the plusvalía and the Land Registry. You deal with one person, in English, from the first email to the registered deed.
Write to me in English through the contact page or on WhatsApp at +34 639 676 352, with a short description of the property, who owns it and where each of you lives.
Answers by Alberto Valiño Arcos, Spanish lawyer and tax adviser (Valencia Bar no. 15042), specialist in co-ownership dissolutions. Updated October 2026. This page is general information and is not advice on any individual case.