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V0016-18 9 January 2018 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ITPAJD · subrogación hipotecaria

Mortgage subrogation is not subject to AJD tax, but changes to valuation are

A query was raised regarding whether the subrogation of a loan and its subsequent novation (extension of term and change of valuation) are subject to Stamp Duty (AJD). The DGT ruled that subrogation does not constitute a taxable event, whereas the modification of the valuation is subject to tax based on the outstanding balance.

The question raised

Whether Stamp Duty must be paid for the subrogation and then paid again for the novation. And whether the tax should only be paid on the increase in the appraisal value and not on the total amount of the outstanding loan principal.

The DGT's ruling

The subrogation of a third party into the mortgage liabilities of the seller does not constitute a taxable event for property transfers or for Stamp Duty (AJD). Novation to extend the term is exempt from the gradual Stamp Duty levy if agreed upon with a financial institution. The modification of the appraisal value is subject to the gradual Stamp Duty levy, with the tax base being the amount of the obligation or guaranteed capital, plus interest, costs, and expenses.

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