Extinción de condominio: the tax-efficient way to split a co-owned flat

The extinción de condominio (dissolution of co-ownership) is the legal mechanism for ending the joint ownership of a property. It's common in divorces, in inheritances with several heirs or when two people who bought a flat together want to go their separate ways. Its big advantage is the tax treatment: it's taxed under Actos Jurídicos Documentados (AJD, a stamp duty on notarised documents) instead of ITP (Impuesto de Transmisiones Patrimoniales, the property transfer tax), which means a significant saving.

How extinción de condominio works

When two co-owners each hold 50% of a flat, one can buy out the other by paying them half the value of the property. That transfer of ownership is formalised as an extinción de condominio before a notary. The co-owner who receives the money transfers their share; the one who pays acquires full ownership.

The tax advantage: AJD vs ITP

Buying half of a flat through an ordinary sale is taxed under ITP (6-10% depending on the CCAA, Spain's comunidades autónomas or regions). An extinción de condominio is taxed under AJD (0.5-1.5% depending on the region). For a €200,000 flat (share transferred: €100,000), the saving can be €4,500-8,500 depending on the region. It's the same economic transaction, but with a different legal framework that is much more tax-efficient.

When to use it

• Divorce: the flat is awarded to one of the spouses, who compensates the other
• Inheritance: when several heirs want one of them to keep the flat and the others to receive their share in cash
• Sociedad de gananciales (the marital community of property): when it's wound up
• Joint purchase: when two people bought together and one wants to sell their share to the other

Also read: what to do when you inherit a flat. Analyse the value of the property with RadarPro before setting the compensation price.