It is the star operation after a divorce or inheritance between two: one keeps the house and compensates the other for his share. Is called condominium extinction y, well done, It is much cheaper than a sale between individuals. Here's how it works, what it costs and the pitfalls to avoid.
What exactly is it
When a home belongs to several people (divorce, siblings, partners), Anyone can ask to leave the co-ownership. If the house is indivisible—like almost all of them—, The legal solution is to award it to one of the co-owners, that compensates others in money for their percentage. That is the extinction of condominium: it's not a sale, is the dissolution of a co-ownership, and that legal difference is what makes the operation cheaper.
The tax advantage: AJD instead of ITP
A sale of half the house would pay ITP (he 10% in the Valencian Community about that half). The termination of the condominium is taxed instead Documented Legal Acts, around the 1,5% —and calculated according to the case on the awarded part—. In a house of 200.000 €, we are talking about thousands of euros of difference. Requirements for the Treasury to respect: compensation must be in money and proportional, and the house really indivisible.
The step that no one can skip: the mortgage
The termination deed does not modify the loan: If you both signed the mortgage, You both still owe even if the house already belongs to you.. The bank must accept the release of co-debtor (novation) or a new mortgage in the name of the one left. The bank will study its solvency alone: It is advisable to have this conversation with the entity before to sign anything before a notary.
How much is it done for?? Value is everything
Compensation is calculated on the value of the home, and that's where the real money is at stake: each 10.000 € difference in valuation are 5.000 € that one party wins and the other loses. Portals don't work (show ad prices, not for sale) and the cadastral reference value marks only a fiscal minimum. What is fair for both parties is a professional valuation with real sales in the area, identical for both.
What if no one can keep it??
So the extinction of the condominium is not your figure: The way out is to sell the entire house and distribute. It is also usually the answer when the person who wants to keep it does not obtain financing alone.. In that scenario, the sooner it is assumed, best price you get: Sales agreed calmly yield more than those forced by the court.
Practical summary
1) Objective assessment. 2) Conversation with the bank about the release of the co-debtor. 3) Numbers of the two options (keep it vs sell). 4) Notary. At Mayrasa we solve the problem for you. 1 free and, If the answer ends up being to sell, we manage the complete sale; For the rest of the steps we guide you from our real estate consultancy. Ask us without obligation.
How much does it cost in practice?
A concrete example: a house of 200.000 € that belongs to two people 50%, and one is left compensating the other with 100.000 €. These are the indicative costs in the Valencian Community:
| Concept | Approximate cost |
|---|---|
| AJD (around the 1,5% on the awarded part) | 1.500 € approx. |
| Notary | 600 – 1.000 € |
| Property Registration | 300 – 600 € |
| Management (optional) | 300 – 500 € |
| Appraisal | 300 – 600 € |
| Novation or new mortgage | Variable, according to the bank |
To compare: if that same half were bought as a normal sale, the ITP would be around 10.000 €. The difference—several thousand euros—is exactly what is saved by carrying out the operation as condominium termination..
Condominium extinction step by step
- Agree on the value of the house with a impartial appraisal, identical for both.
- Talk to the bank: release of the co-debtor or new mortgage in the name of the person remaining.
- Sign the deed of extinction before a notary, with monetary compensation.
- Liquidate the AJD (model 600) within deadline.
- Register the new ownership in the Property Registry.
Frequent errors in condominium termination
- Write it as a sale and pay the ITP of the 10% instead of the AJD of 1,5%.
- Offset with other assets instead of money, what can make you lose the advantageous tax treatment.
- Award for a non-proportional value and generate an excess allocation that is taxed as a normal transmission.
- Sign without resolving the mortgage and continue to respond as co-signer of a house that is no longer yours.
- Set word value and discover later that one party has lost thousands of euros.
Frequently asked questions
How much do you save compared to a sale??
The difference is in the tax: a sale of half pays ITP (he 10% in the Valencian Community), while the termination of the condominium pays AJD (around the 1,5%). In an average home, That's several thousand euros in savings..
On what value is the AJD paid??
Generally on the value of the part that is awarded, with the reference value as the fiscal minimum. That is why a well-done appraisal not only distributes fairly between the parties, It also supports the value declared before the Treasury.
Can the bank refuse to release me as a co-signer?
Yeah. The bank only releases one if the one who stays demonstrates that he can pay the fee alone. If you don't accept it, The alternatives are to look for another bank that will subrogate the mortgage or, if there is no financing, sell the house and distribute.
Does the termination of the condominium work if there are three or more of us??
Yeah. One wins the house and compensates everyone else in money in proportion to their share.. If no one can or wants to keep the property, the exit is again sell the entire house and distribute the amount.
In inheritance and divorce: same rules, different shades
The figure is the same whether the co-ownership comes from an inheritance between siblings or from a divorce., and in both cases the tax savings (AJD instead of ITP) works the same. The nuances are at the starting point. In one inheritance, The house usually arrives without a mortgage but with more co-owners, so the challenge is that everyone accepts the same value and that whoever keeps it can compensate the others. In a divorce, The usual thing is that there are only two parties but with a joint mortgage alive, and there the bottleneck is almost always the bank. In both scenarios, the correct order is identical: first the target value, then the financing and, finally, I would notary it. Resolving these two steps before signing is what turns a tense operation into a calm procedure.
