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V2258-14 3 September 2014 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ITPAJD · ampliación de préstamo

Taxation on mortgage loan extensions and interest novation may be exempt

A query was raised regarding the taxation under the Transfer Tax on Documented Legal Acts (ITPAJD) of a deed involving a principal extension and the modification of interest rates and terms of a mortgage loan. The Directorate General for Tax (DGT) ruled that these are two distinct operations that must be taxed separately, regardless of whether they are formalised in a single document or two separate ones.

The question raised

Taxation of the proposed operation under the Transfer Tax and Documented Legal Acts Tax, specifically, whether the benefits of Law 2/1994, of March 30, which regulates the subrogation and modification of mortgage loans (art. 9) are applicable, and whether the tax treatment would differ if the extension were formalized in one deed and the interest and term modifications in another.

The DGT's ruling

The extension of a loan by a financial institution is taxed under the modality of documented legal acts for the amount of the extended principal, plus interest and expenses. On the other hand, a modificatory novation that changes the interest rate and extends the term is exempt from the gradual levy on documented legal acts, provided it is by mutual agreement and the creditor is a financial institution according to Law 2/1994.

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