In this brief comment, we will examine the tax treatment of the sale and mortgage, at a general level in Spanish territory, and we will point out, by way of example, exceptions such as those of Vizcaya and Cantabria.
The most common reason for mortgaging a property is the constitution of a mortgage for the acquisition of a home, using said home as a guarantee of payment.
In these cases, the financing operation is accompanied by a sale of the property, which implies the existence of three legal businesses: the sale, the loan and the mortgage.
The sale:
1. When an entrepreneur (eg promoter) intervenes in the business of sale, in the exercise of professional or professional activity, and it is the first transfer of the home, the operation will be subject to taxation by the Value Added Tax (VAT). This is the case of a new construction home purchase:
APPLIED TYPE: GENERAL. 10%.
OFFICIAL PROTECTION HOUSING: 4%
2. In the event that an entrepreneur (eg promoter) intervenes in the sale and purchase business but it involves the transfer of a second or subsequent home, the operation will be taxed by the Tax on Onerous Patrimonial Transmissions (TPO) instead of paying VAT. , unless the application of the exemption is waived, in which case the operation will continue to be subject to and not exempt from VAT. And when the sale is carried out between individuals, without the intervention of an entrepreneur, the operation will be subject to the payment of TPO:
APPLIED TYPE TPO: the one established by each Autonomous Community:
MADRID: a general rate of 6% is applied, and 4% for large families in the event of acquiring a habitual residence;
VIZCAYA: the rate varies between a minimum of 2.5% (for a habitual residence, with less than 120 m2, and other requirements…) to 4%, up to 7%.
CANTABRIA: in general, it is 10%, 8% for a habitual residence with a price of less than € 120,000 or for individuals with an income of less than € 30,000, and if the homes have a purchase value between € 120,000 and € 200,000 is 9%. 5% will be applied if it is purchased in a community partnership and only one of the spouses is under 30 years of age.
In the event that the CCAA had not established a rate, 6% will be applied.
The loan:
The loan as such is NOT taxed. However, this non-taxation has nuances depending on how the loan is documented.
TPO: The applicable regulations establish that loans will be subject to but exempt from the Tax on Onerous Patrimonial Transmissions, regardless of the way in which they are implemented.
VAT: As the mortgage loan is generally granted by those who habitually engage in it within their business activity, it is subject to VAT, however it is exempt from its payment.
How are the incorporation procedures taxed?
As a general rule, in the formalization of legal businesses, the applicable tax regulations establish that the purchaser of the property or right and, failing that, the persons who will be obliged to pay the Tax on Documented Legal Acts (IAJD) as taxpayer Insist or request the notarial documents, or those in whose interest they are issued.
In particular, with regard to the deeds of constitution of loans with guarantee, until the entry into force of Royal Decree-Law 17/2018 on November 12, 2018, the legislator imposed the payment of the tax on the borrower. However, with the entry into force of the aforementioned rule, approved as a result of the Sentence of the Contentious-Administrative Chamber of the Supreme Court number 1505/2018 of October 16, 2018, the previous regime was modified establishing that “When in the case of loan deeds with mortgage guarantee, the lender will be considered a taxable person ”.
Therefore, the one obliged to pay the IAJD will be the entity that grants the mortgage loan.
Taxation of novations and subrogations:
• Fixed IAJD fee:
The first copies of deeds and notarial acts will be taxed by IAJD, when they have as their object a valuable quantity or thing, or contain acts or contracts that can be registered in the Property Registries.
• IAJD gradual fee:
to. Novaciones: The deeds of modifying novation of mortgage loans will be exempt from the gradual modality of the IAJD, when the modification is of the conditions of the interest rate initially agreed or in force, or the alteration of the term of the loan. For the purposes of the aforementioned exemption, loans and mortgage credits are equated. In addition to the above, the deed of a mortgage that includes the modification of the appraised value will not be subject to the IAJD.
b. Subrogations: They are exempt from the gradual IAJD modality. In any case, it is important to point out that the taxation in these cases will depend on the specific element that has been modified, so the particularities that affect the case must be analyzed.
Taxation of mortgage cancellation:
The first copies of notarial deeds documenting the cancellation of mortgages of any kind are subject to but exempt from the gradual IAJD fee.
Despite this, the corresponding exempt self-assessment must be made in the corresponding Tax Agency model, even if it does not involve any payment.
In those cases in which the cancellation is made through a private document or at the request of the Property Registrar, it will not be subject to IAJD.
ELENA PEREZ-ILZARBE DOMINGUEZ.
ATTORNEY