Selling a flat in the event of divorce: options, taxes and steps

A separation or divorce means having to make important decisions, and one of the most sensitive is what to do with the shared home. Selling a flat in the event of divorce is one of the most common options, but not the only one. In this guide we look at the alternatives, the steps to follow and the points worth reviewing with your lawyer and tax adviser so you can make the decision with peace of mind.

First, clarify the situation of the property

Before deciding, it is important to know three things: who is named as the owner in the deed and in what proportion, what the marriage’s matrimonial property regime is (joint ownership, separation of assets or another) and whether there is an outstanding mortgage and who is named as debtor. It also matters whether there are minor children and whether the divorce settlement or a court ruling grants the use of the home to one of the spouses. All of this affects the options available.

Option 1: sell the property to a third party

If both parties agree, selling the flat and splitting the money is often the cleanest solution. It allows the mortgage to be cancelled, the shared debt to be settled and each person to begin a new chapter. For this to work, it is advisable to agree from the outset the minimum price, who will handle viewings and how costs will be divided. An agency can act as a neutral intermediary and facilitate communication between both parties.

Option 2: one person buys the other’s share

One of the spouses can keep the property by acquiring the other’s share. This transaction is usually formalised through a dissolution of joint ownership or in the liquidation of the community property. If there is a mortgage, the bank must agree for the debt to be placed in the name of a single borrower, which requires proof of sufficient solvency. The tax treatment of these transactions can differ from that of a sale and purchase, so it is essential to check this with an adviser.

Option 3: keep the property jointly

In some cases, especially when there are minor children, the decision is made to keep the property for a time. It is important that the agreement makes clear who pays the mortgage, the community fees and the IBI, and what will happen in the future.

Tax aspects to review

The sale may generate a capital gain that each owner declares in their income tax return according to their share, in addition to the municipal capital gains tax. There are situations with specific tax treatments, such as reinvestment in a main residence or certain allocations in the liquidation of the marriage. As every case is different, we recommend that your tax adviser reviews the figures before you sign anything.

Steps for a successful sale

1. Agree in writing to sell and on the minimum price.

2. Obtain an objective valuation. You can start with our free online valuation tool.

3. Gather the documentation: title deed, simple registry extract, energy certificate, bills and mortgage debt certificate.

4. Define who handles the viewings and how decisions about offers will be made.

5. Sign the reservation deposit and the deed in the presence or representation of both owners.

Neutral support

At times like this, having a professional who maintains neutrality and discretion makes the process much easier. At UBICASA we help you sell your flat in Madrid with transparent communication with both parties. If you would prefer to keep the property and earn income, we can also help you let it.

This article is for information only and does not replace legal or tax advice. Contact us from Monday to Friday from 10:00 to 15:00 and from 16:00 to 19:00.