Changing the titleholders on a deed to a home may be a necessary process for a variety of reasons. Whether it is forthe sale of property, an inheritance, including your partner in the deed or due to a divorce or breakup, it is critical to understand the steps to take in each specific situation.
Change of ownership due to Purchase and Sale
The sale of a property implies a change of ownership that must be formalized before a notary by means of a public deed. In addition, it is essential to update the information in the Land Registry and the cadastre. This process entails costs, such as notary fees, Land Registry fees and various taxes that must be covered by both parties.
It is important to note that the associated taxes include the Transfer Tax, payable by the buyer, the Stamp Duty, also paid by the buyer, and the municipal capital gains tax, which is the responsibility of the seller. In addition, the seller must declare the capital gain in the Personal Income Tax (IRPF).
Change of ownership of a property due to inheritance
When the change of ownership is due to an inheritance, the procedure at the notary’s office and the Land Registry is similar to that of the purchase and sale.
However, previous steps related to inheritance must have been taken. The taxes to be paid are the same as in the previous case, but the Transfer Tax is replaced by the Inheritance Tax.
Adding your partner on the deed of homestead
In situations where a couple residing in a home wishes to have the property in both of their names, a transfer of ownership is necessary.
This can be achieved by buying and selling an undivided part of the house or donating it to the other person. Both processes require a public deed before a notary, the update in the Land Registry and the payment of taxes such as Stamp Duty (IAJD), Personal Income Tax (IRPF) and, if applicable, gift tax.
Housing with Mortgage
In a mortgage, if two people (for example, a couple) are paying jointly, but only one of them is the official owner of the house, the person who is not the owner can claim from the owner the part he has paid. This is especially relevant for couples who are not married or who are married under a separation of property regime.
Marrying in community property after buying a house: If a couple marries in community property after buying a house and before finishing paying the mortgage, there is a general rule and an exception:
- General rule: If one spouse bought the house in installments before marriage, the house is his or her private property, even if the mortgage is paid in whole or in part with money from the marriage. The portion of the price of the house paid with money from the marriage is considered a loan to be repaid when the marriage ends by divorce or death.
- Exception: If the house purchased is used as a family dwelling, and the price is paid partly with marital money and partly with private money, the ownership of the house will be divided between the married couple and the spouse(s), in proportion to the value of their respective contributions. This means that both spouses would own the house, but each in the proportion in which they are paying the mortgage.
In a divorce, the process for removing a titleholder from the deed depends on whether or not there is an outstanding mortgage.
When there is an outstanding mortgage, the bank’s authorization must be obtained for a mortgage novation, modifying the clauses of the contract. Simultaneously, an extinction of condominium takes place, where the party acquiring the property financially compensates the other party for its share.
The expenses include notary fees, Land Registry, Stamp Duty and the official appraisal of the property.
In the absence of an outstanding mortgage, it is only necessary to carry out the extinction of the condominium, with the same steps and costs detailed above.
As you have seen, changing the deed holder of a home involves a series of legal and financial steps that vary depending on the situation. It is crucial to have professional advice, such as a real estate agency, to ensure that the process is carried out properly and efficiently.
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