Existence of a change in net worth

Capital gains and losses are the variations in the value of the taxpayer's assets that become apparent as a result of any change in their composition, unless they are classified as income under this Law.

Article 33.1 of Law 35/2006, of November 28, 2006, on Personal Income Tax and partially amending the Corporate Income Tax, Non-Resident Income Tax and Wealth Tax Laws (Official State Gazette of November 29, 2006), establishes that "capital gains and losses are the variations in the value of the taxpayer's assets that become apparent on the occasion of any alteration in the composition thereof, unless they are classified by this Law as income".

Paragraph 2 of the same precept provides that "It will be considered that there is no alteration in the composition of the patrimony:

In the cases of division of the common thing.

In the dissolution of the community of property or in the extinction of the matrimonial economic regime of participation.

In the dissolution of communities of property or in the cases of separation of co-owners.

The cases referred to in this section may not give rise, in any case, to the updating of the values of the assets or rights received."

In accordance with the foregoing, the dissolution of a community of property and the subsequent award to each of the co-proprietors of their corresponding share in the community does not constitute any alteration in the composition of their respective assets that could give rise to a capital gain or loss, provided that the award corresponds to the respective share of ownership. In these cases the values of the assets or rights received cannot be updated, which will retain the original acquisition values and, for the purposes of future transfers, the original acquisition dates.

Only in the event that assets or rights are attributed to one or some of the co-owners for a greater value than that corresponding to their share of ownership, there would be an alteration in the assets of the others, generating a capital gain or loss.

This would be the case, for example, in an inequitable distribution among the members of a community of property, in which the valuation of the part awarded to one of the co-owners is, for example, lower than the part awarded to the others, which will give rise to a capital gain or loss, regardless of whether or not there is compensation in cash, the amount of which will be determined, in accordance with the provisions of article 34 of the Tax Law, by the difference between the acquisition and transfer values, values which are defined in articles 35 and 36 of the Tax Law, for onerous and lucrative transfers, respectively.

Article 35 provides as follows:

"1. The acquisition value shall be formed by the sum of:

(a) The actual amount for which such acquisition was made.

b) The cost of the investments and improvements made in the assets acquired and the expenses and taxes inherent to the acquisition, excluding interest, which have been paid by the acquirer.

Under the conditions to be determined by regulations, this value shall be reduced by the amount of depreciation.

2. The transfer value shall be the actual amount for which the disposal would have been made. The expenses and taxes referred to in paragraph b) of paragraph 1 shall be deducted from this value insofar as they are paid by the transferor.

The actual amount of the disposal value shall be taken to be the amount actually paid, provided that it is not lower than the normal market value, in which case the latter shall prevail."

As regards the market value corresponding to the real estate, it is the one that would correspond to the price agreed for its sale between independent parties at the time of the adjudication. In any case, the determination of said value is a question of fact, which may be accredited by means of evidence admitted by law, the valuation of which will correspond to the management and inspection bodies of the Tax Administration.

The capital gain or loss generated will be included in the savings tax base in the manner provided for in Article 49 of the Tax Law.