From time to time we receive an enquiry advising that someone is getting a divorce. One person is going to retain the Spanish apartment and the other the house in the UK, for example. Therefore they need to take one name off the Spanish property and transfer ownership to the other. So how do people go about this and how much would it cost?
Division of Joint Ownership
This is known as a dissolution of joint ownership or division of joint tenancy. There is a method to deal with the transfer whereby the property is only subject to payment of Stamp Duty in Spain. In this region this is at the rate of 1.5% on the outgoing share. This is paid by the co-owner keeping the property or agreed between the couple as part of the divorce. This is as opposed to the normal 10% buying tax and 3% retention being withheld in this region when a purchase/sale.
Besides the cost of 1.5% Stamp Duty on the outgoing share, if there is a mortgage the Bank has to agree. Of course, they will have their fees for re-arranging the mortgage, which they advise directly. The clients would need to supply the Bank with all the paperwork they require. However as Banks rarely agree now to take a name off a mortgage. As they do not want to lose a guarantor. Sometimes it is best just to do a private contract between customers so that the outgoing party would be absolved of the mortgage.
Costs on a Dissolution of Joint Ownership
Notary fees, land registry fees, stamp duty, and legal fees have to be paid. (As well as the bank´s fees if there is a mortgage). We can advise the fees for making the change of the deed at the Notary. We need the deeds of the property and the local council tax bill for last year (SUMA in our area). Plus details of the mortgage if there is one.
Process of Change of Ownership
The process usually takes about a month to six weeks. Really it depends whether all the information is readily available. And if clients both would be coming to Spain or whether we would need prepare and send powers of attorney to them in the UK. We will also need a copy of any divorce agreement.
Sometimes clients say to us that on doing my research on this matter they have come across a situation. Whereby the person who is giving up their half of the property has to prove that they have received monetary compensation from the person retaining the property. In many cases, someone does not receive any actual monetary compensation. But as part of the divorce settlement would be awarded the ex ‘s 50% share in the property in the UK or Ireland.
So does this qualify for only paying the 1.5% stamp duty in some areas rather than paying as a more expensive purchase and sale? The answer is yes. A copy of the divorce or separation agreement will suffice to justify the stamp duty, so that is fine.
We can act all over Spain for this process. In the first instance, either the deeds and IBI can be scanned and emailed. Or clients can send copies by mail.
Then we can calculate costs and advise them and the process for changing the ownership. Contact us if you are interested in a division of jointly owned property and want to ask questions or send us the deeds.