Permuta with compensation: how it is valued, declared and deeded

A clean permuta — house for house, nothing else — is rare, because two homes almost never have the same value. What actually happens is a permuta with compensation: the party receiving the more valuable home makes up the difference in money. In Cuban usage that money is the vuelto, and it has been fully legal since Decree-Law 288 of 2011 allowed compensation to be agreed and declared.

It is the instrument that solves the hardest problem in this market: moving house when there is no mortgage credit. This guide covers how to arrive at the compensation figure, how it is taxed and what has to appear in the deed.

Why the swap-plus-money beats a sale-then-purchase

Anyone who sells in order to buy spends a period holding cash and no home, in a market where the property they want can be gone in a week and where holding a large sum in cash is a risk in itself. In a permuta, both moves happen in the same act: two deeds, one moment, nobody left in between.

It also lowers the amount of cash that has to change hands. Instead of the full price of a home, only the difference between two homes moves — which, in a country with no mortgage lending, is frequently the difference between a transaction that is possible and one that is not.

Setting the compensation

The compensation is simply the gap between the market values of the two homes, and the whole negotiation reduces to agreeing those two values. The mistake to avoid is comparing homes against each other directly — "mine is bigger than yours" — instead of comparing each one against its own market.

Value each home separately, in the same currency, against listings of similar properties in its own zone: same municipality or neighbourhood, similar bedrooms and bathrooms, similar construction condition. Then subtract. Our price calculator gives the median of comparable listings for each zone, which is the closest thing to a neutral reference either party will find.

1. 1Value home A against comparable listings in its zone.
2. 2Value home B against comparable listings in its zone.
3. 3Adjust each for condition, water supply, garage and legal status.
4. 4The compensation is the difference — in one currency, stated explicitly.
5. 5Agree who pays what of the taxes and fees before going to the notary.

How it is taxed

A permuta is taxed on what each party acquires. Each permutante pays 4% on the updated value of the home they receive; where compensation has been declared, the party receiving the money adds it to their base — the tax applies to the value of the home plus the declared compensation.

As in a sale, the value used cannot fall below the minimum reference value set by the Ministry of Finance and Prices, and the payment is credited at the moment the deed is formalised before the notary. Both parties should ask for the reference value of both homes before agreeing anything: it is a known number, and it sets the floor of the bill.

Everything goes in the deed

This is the part where permutas with compensation go wrong. The temptation to leave the money out of the deed — to save on tax, or simply because "we trust each other" — creates a transaction in which one party has handed over a substantial sum with no legal record that it was ever paid.

If the compensation is not in the deed, it does not exist for any purpose that matters: not for the tax authority, not for a court, not for the buyer of either home three years from now. Declare the amount, the currency, when it is paid and how, and have the notary reflect it.

• The full identification of both homes, matching their technical descriptions.
• The value attributed to each home.
• The amount of the compensation, its currency and the terms of payment.
• Any conditions — dates of handover, what stays in each home.
• Confirmation that both properties are free of liens, per the Registry certificates.

Before you sign: the same checks as a purchase

You are acquiring a home, so verify it exactly as you would in a purchase: an up-to-date ownership and liens certificate for the other property, a resolved inheritance if there was one, a technical description that matches the building, and a physical inspection of the house itself, more than once.

Verify the other party too. Their identity document must match the registered owner, and if they act for someone else, the power of attorney has to be original and specific. Everything that protects a buyer protects a permutante, for the same reasons.

Multiple permutas

Chains of three or more families swapping in sequence still exist, and they resolve situations no simple swap can. They are also harder to hold together: every additional party is another set of documents to verify, another value to agree and another person whose circumstances can change before signing day.

If you are in a chain, insist that all the deeds are signed in the same act. A chain that executes in stages leaves whoever moves first exposed to the whole thing collapsing behind them.