Non-resident ending a co-ownership in Spain: why a loss on one property cannot offset a gain on another

If you do not live in Spain and you end a co-ownership over several properties (in Spanish, extinción de condominio), you can make a gain on one and a loss on another. The loss does not reduce the tax on the gain. You pay on the property where you made the gain, even if the two add up to zero. The same happens if you sell to a third party.

This comes from art. 15.1 of the Spanish Non-Resident Income Tax Act (TRLIRNR). The Directorate General of Taxes (DGT) applied it in binding ruling V2172-16, and the Central Economic-Administrative Court (TEAC) in decisions 00/01975/2021 and 00/07013/2021.

What happens when you end a co-ownership in Spain as a non-resident

It depends on where you live. If you live outside the European Union and the European Economic Area, for example in the United Kingdom or the United States, art. 24.4 TRLIRNR excludes art. 33.2 of the Spanish Income Tax Act, the rule that says there is no change in your assets when common property is divided. The gain on ending the co-ownership is fully subject to Non-Resident Income Tax (IRNR), according to binding ruling V1831-12.

If you live in another EU or EEA state, art. 24.6 TRLIRNR does let you apply art. 33.2. There is no gain or loss if your allocation matches your share. If a property goes entirely to the other co-owner and you are compensated, there is a gain or a loss subject to IRNR (V1831-12).

In both cases the tax accrues when the change in your assets takes place (art. 27.1.b TRLIRNR, cited in V1831-12). The co-owner who keeps the property must withhold and pay 3% of the agreed consideration (art. 25.2 TRLIRNR).

What art. 15.1 TRLIRNR says about offsetting gains and losses

If you obtain income in Spain without a permanent establishment, this is the rule (my translation):

“Taxpayers who obtain income without a permanent establishment shall be taxed separately on each total or partial accrual of taxable income, with no offset of any kind between those items of income, and on the terms set out in Chapter IV.”

The taxable base for capital gains is worked out by applying the rules “to each change in assets that takes place” (art. 24.4 TRLIRNR, and in the same terms art. 24.6 for EU and EEA residents).

Example: two flats in co-ownership, a gain on one and a loss on the other

Here is an example with round figures and no costs. You live in the United Kingdom and own 50% of two flats with your brother. He keeps both and pays you for your half. Your half of the first flat cost you €40,000 and you receive €90,000. Your half of the second cost you €100,000 and you receive €50,000.

Added together, the two flats come to zero. The IRNR on the first flat is €9,500 and, after deducting the €2,700 withheld, you still have €6,800 to pay. The loss on the second flat does not reduce that amount. To recover the €1,500 withheld on that flat, you also have to file its Form 210, the Spanish non-resident tax return.

What the DGT says in binding ruling V2172-16

The DGT and TEAC cases below are sales. Art. 15.1 refers to each accrual of income, without distinguishing the transaction that produces it.

In V2172-16, of 19 May 2016, the taxpayer lives in Germany. In 2014 he sold a property in Spain at a loss and he plans to sell a plot of land at a gain. He asks whether he can offset one against the other.

The DGT answers that these are two separate changes in assets and that the tax accrues twice. Under art. 15.1 they are treated separately, with no offset.

What the TEAC has decided on non-residents offsetting gains and losses

In decision 00/01975/2021, of 19 July 2024, the claimant lives in Chile. In 2018 he sold shares in a Spanish company at a gain and a property in Madrid at a loss. He filed a Form 210 for each one, paid €7,660.80 on the gain and later asked for it back, because overall he had lost money.

The TEAC dismissed the claim. There are two changes in assets and two accruals, declared separately and with no offset. The reason it gives is that the TRLIRNR does not refer to the Spanish Income Tax Act as a whole, and the part it refers to leaves out arts. 47 onwards of that Act, the articles that allow residents to offset.

The claimant argued that this difference is discriminatory and contrary to the free movement of capital. The TEAC replied that there is no such discrimination, because the different rules rest on the different nature of the two taxes, and added that the European Commission has not opened infringement proceedings against Spain on this point.

Two properties in one deed at a single price: is that one transaction?

That is the case in decision 00/07013/2021, of 25 February 2025. The claimant lives in Germany and sold, in one deed, two properties she had inherited from her parents, at a total price of €550,000. The deed allocated €400,000 to one and €150,000 to the other. She filed a single Form 210 showing a loss and asked for the €16,500 withheld to be refunded.

The Spanish tax office separated the two properties, calculated a gain of €134,743.78 on the one valued at €150,000 and assessed €21,967.24 to pay. The TEAC upheld the assessment. The two properties have separate cadastral references, so there are two changes in assets and two accruals, and a single price does not turn them into one. It also repeated the position taken in its 2024 decision.

The claimant also argued that €150,000 was not the real value of that property and proposed dividing the price according to cadastral value. The TEAC kept the value in the deed, because the only evidence she provided was the cadastral certificate.

How many Forms 210 you have to file if there are several properties

One per property. Art. 2.1.a) of Order EHA/3316/2010 requires each accrual of income from a property transfer to be declared separately. The exception is a property jointly owned by a married couple who are both non-resident, who may file a single return.

The TEAC has applied this to a home, a storage room and a parking space sold in the same deed (decisions 00/07313/2019 and 00/01294/2020): there must be as many returns as cadastral references.

If a property shows a loss and you want the withholding refunded, you also have to file its Form 210, under the same article of the Order.

Who this rule applies to

It applies to anyone who obtains income in Spain without a permanent establishment. In V2172-16 and in the 2025 decision the taxpayer lives in Germany, and in the 2024 decision, in Chile. If you are unsure of your position, read when you are tax resident in Spain.

A Spanish resident combines and offsets the capital gains and losses of the year (art. 49.1.b of the Spanish Income Tax Act).

How to run your own numbers

Use the Spanish capital gains tax calculator: enter each property in its own block and tick “I am not tax resident in Spain: use IRNR (19%)”. For how a split is taxed when you live outside the EU, read the tax non-residents face when they split co-owned property, and for how I approach these transactions, dissolving co-ownership in Spain.