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How to divide assets in a divorce:
In separation, annulment or divorce proceedings, spouses may divide jointly held property with respect to any assets they hold under ordinary co-ownership.
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Written by Maria Serra
Lawyer and mediator
In many cases, the family home is owned 50/50 by both spouses, which raises the question of whether granting the right of use to one party can prevent either co-owner from seeking a partition of the property. Unless the parties have agreed to maintain joint ownership, an agreement that may not exceed 10 years under Article 552-10.2 of the Catalan Civil Code (CCCat), both legal doctrine and case law recognise that a partition action is not barred merely because a ruling in separation or divorce proceedings has assigned the right of use to one of the co-owning parties.
Accordingly, an action for partition of the family home arises in situations where spouses or partners in a stable union hold equal co-ownership of the property and one of them wishes to end the joint ownership arrangement. In such cases, the law grants that party the right to bring a partition action, which may be pursued both in the context of separation or divorce proceedings and in proceedings to vary existing arrangements.
Prior to the entry into force of the Catalan Civil Code (CCCat), it was well established that a partition action could be joined to separation or divorce proceedings, but not to applications to vary existing arrangements. However, following its entry into force, the Barcelona Provincial Court has ruled in favour of allowing such actions to be joined to variation proceedings as well.
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TAX IMPLICATIONS IN DIVORCE PROCEEDINGS INVOLVING THE DIVISION OF JOINTLY OWNED PROPERTY:
From the perspective of the Personal Income Tax Act (LIRPF), this type of transaction is tax-neutral, since it always involves the specification of an undivided share of an asset. In effect, what changes is the nature of the holding, from an abstract half-share of the whole to a defined undivided half of something concrete.
The Personal Income Tax Act provides that there is no alteration to the composition of a person's estate in cases of division of jointly owned property, dissolution of co-ownership arrangements, or separation of co-owners, provided that the allocation respects each co-owner's proportionate share of ownership. That said, the Spanish Directorate General of Taxation (DGT) has established that a spouse who exchanges their ownership share for money, another asset, or even transfers it gratuitously, will realise a capital gain equal to the difference between the transfer value of their share and its tax acquisition cost.
Nor will the transaction trigger indirect taxation (Transfer Tax and Stamp Duty: ITPAJD), provided the situation genuinely involves a jointly owned property, co-owned by both spouses, being dissolved by awarding 100% ownership to one spouse in exchange for a cash payment to the other, and the property is either genuinely indivisible or, if divisible, would lose significant value upon division. This exemption applies in all cases where the property is the couple's primary residence. However, if the compensation is not made in cash, Transfer Tax (ITP) will be payable, unless the indivisibility is inherent to the asset being divided and any excess allocation is therefore unavoidable, as the Directorate General of Taxation (DGT) has confirmed.
Where multiple jointly owned assets are involved, the DGT clarifies that indivisibility must be assessed across the pool of assets as a whole, rather than asset by asset. Consequently, if any excess allocation can be avoided or reduced by forming separate lots, that excess will be subject to ITP. It is worth noting that the new Article 232-12.2 of the Catalan Civil Code (CCcat) provides that, at the request of either spouse, the court may consider all jointly owned assets together for the purpose of forming lots and making allocations[1].
If the dissolution of the matrimonial home is carried out by means of a court ruling, that is, the agreement to divide the jointly owned property forms part of the divorce settlement, then it will also be exempt from Stamp Duty (Actos Jurídicos Documentados, AJD). However, if it is formalised before a notary (public deed), Stamp Duty (AJD) will apply.
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