Matrimonial property and shared ownership – based on the draft

The general joint-ownership rule would begin with ownership shares

Under Section 7(1), jointly owned assets would be attributed to taxpayers in proportion to their ownership shares. The rule would concern more than real estate and would not be limited to spouses. It would apply correspondingly to rights and other assets held jointly by several people. Shared ownership alone would therefore not cause the entire value to be included for every person concerned.

Section 7(2)–(3) would establish a separate allocation system for matrimonial common property. Ordinary proportional allocation and the spouses’ election would not be the same rule. The former would follow ownership shares; the latter would permit different tax-base attribution for specified assets under specified conditions. The election could not automatically extend to everything held jointly.

Contractual arrangements would take priority

Under Section 7(2)(a), matrimonial property agreements and other contracts between the spouses would govern inclusion of matrimonial common property. The wording would therefore recognise more than one contractual category. Attribution of an asset covered by a contract would follow those provisions rather than merely the name appearing on an account or register.

The following rule would address the absence of a matrimonial property agreement or assets omitted from it. An agreement’s existence would consequently not necessarily settle every asset’s position. Section 7(2) could produce different outcomes for different assets depending on whether the agreement actually covered them. The draft would not supply the external private-law rules governing contractual validity.

Registered assets could be allocated in one of two ways

Section 7(2)(b) would permit an election for common assets recorded against one spouse’s name. Relevant records could include public-authentic or official registers, statutory records, and accounts or registers maintained through financial, investment or other services. The condition would not merely be that one spouse managed or used an asset: the specified form of recorded attribution would matter.

The asset would appear either exclusively in the named spouse’s tax base or equally in both spouses’ bases. The provision would not permit arbitrary per centages or, through this election alone, attribution of the entire value to the other spouse. It would still concern matrimonial common property; reference to registration would not independently transform every recorded asset into common property.

Matching declarations would be necessary for a valid election

Under Section 7(3), the election would be valid for an affected asset only if both spouses submitted declarations with identical content on the authority’s designated form. The draft would link the deadline to Section 25(1): generally, 31 August of the following year. This would be a proposed procedural deadline, not an existing filing or declaration obligation.

Agreement between the spouses would therefore matter beyond their private understanding. The draft would expressly require an official form, matching content and timely submission, all operating together. Because the provision would refer to the affected asset, the declarations would need to reflect its chosen attribution. One spouse’s independent return treatment would not replace the required matching declaration from the other.

The election would bind both spouses for the year

Under Section 7(3), an election would apply to the particular reporting year and bind both spouses. Their returns would have to follow it, preventing incompatible treatment of the same asset. The rule would establish the election’s annual effect, rather than an indefinite allocation automatically covering every later change in their wealth.

Subsequent amendment would likewise require matching declarations. If the spouses failed to submit matching declarations on time, the computed value of an asset within paragraph (b) would be allocated equally. The consequence would neither be omission nor automatic attribution of the whole value to the registered spouse. The draft would expressly prescribe allocation between both spouses when a valid election was absent.

Equal allocation would govern the remaining asset category

Section 7(2)(c) would divide the computed value of assets outside paragraphs (a) and (b) equally between the spouses’ bases. This would differ from equal allocation following failure to declare an election. In that situation, an eligible registered asset would lack a valid election; here, the asset itself would fall into the residual category. The outcome could match, but the legal basis would differ.

Allocation would concern the computed value established under the draft. Under Section 10, applicable asset-specific valuation rules would determine it, with year-end arm’s-length market value applying where no specific rule existed. Spousal allocation would not independently provide a valuation concession. It would determine who included the value, not permit a freely reduced amount merely because ownership was shared.

Individual bases and debt rules would remain separate

After attribution under Section 7, each spouse’s tax base would be determined under Section 6. The HUF 1 billion threshold would concern taxable wealth reduced by qualifying debts; Section 7(1)–(3) would not introduce a consolidated matrimonial tax base. Nor could debt deductibility be inferred solely from asset allocation, because Section 6 would impose its own existence and substantiation conditions.

Meanwhile, Section 1(3) would prevent repeated inclusion of the same value and multiple deductions on the same factual basis for the taxpayer concerned. Section 25(7)–(8) would require support for the share, value and valuation information reported. The spousal election would therefore govern attribution between people while the general limits on valuation, deductions and documentation would remain applicable.

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