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V5323-16 15 December 2016 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · base imponible

Donation of mortgaged property is taxed on its full value if the donee does not assume the debt

A query was raised regarding whether the debt on a mortgaged property is deductible in a donation if the recipient does not assume the mortgage. The Directorate General for Taxes (DGT) ruled that, in the absence of verifiable assumption of the debt, tax must be paid on the total market value of the property.

The question raised

Tax base for the purposes of Inheritance and Gift Tax

The DGT's ruling

In order for debts secured by real rights to be deductible in a donation, the acquirer must have formally assumed the obligation to pay the debt. If the donee does not assume said obligation, the amount of the debt shall not be deductible and the donation shall be taxed on the total value of the assets. Notwithstanding, the acquirer shall be entitled to a refund of the corresponding portion of the tax liability if they prove payment of the debt on their own account.

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