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Who pays the taxes and the expenses of the constitution of the mortgage of my house?



Supreme Court ruling


The plenary of the Contentious-Administrative Chamber took an unexpected turn and changed the position of the Supreme Court deciding, by a very tight majority, that it is the consumer and not the bank who must support the Tax on Documented Legal Acts in the constitution of a mortgage for the purchase of a house or other property.


This decision contradicts and revokes the three final judgments of last October issued by the Third Chamber in which it was established that it was the financial entities and not the client who had to pay the tax in question.



Decree Law that modifies the Tax on Patrimonial Transmissions and Documented Legal Acts


The Spanish government has promoted the legal change after the decision of the plenary session of the Contentious-Administrative Chamber of the Supreme Court to rectify the three rulings that it issued in October according to which the banks, and not the clients, should pay the tax.


According to Royal Decree Law 17/2018, of November 8, which modifies the art. 29 of the Law on Transfer Tax and Documented Legal Acts, establishes that "In the case of loan deeds with mortgage guarantee, the lender will be considered a taxpayer", that is, the banking entity must pay the TPyAJD tax.


The Royal Decree Law, declares exempt from paying mortgage loan deeds in which the borrower is certain entities and institutions, such as the State or the Church, which were already exempt when this tax was paid by customers.


It has also been announced that the government will create a client protection authority that will assume functions of the Bank of Spain and the National Securities Market Commission to try to avoid that banks end up passing the tax on their clients based on increasing the commissions. .


This provision has entered into force on November 10, 2018.



Mortgages signed before November 10, 2018


The tax must be paid by the borrower, that is, the client.


However, we must remember that the clause imposing expenses included in mortgage deeds remains null, as declared by the Supreme Court in judgments that have not been modified and, therefore, the consumer may claim notary fees, registration, management and appraisal that forced him to pay when he signed the deed, plus the corresponding legal interests.

Clients can also go to the courts of instruction under the argument that the bank imposed the payment of the fee within an abusive clause in which it was determined that the borrower should take care of all the costs of the mortgage. Although the Supreme Court has changed the jurisprudence, following it is not an obligation of the judges who can determine that the clause is abusive and demand the return of the money.


We recommend maintaining vigilance as to why consumer organizations are likely to turn to European justice and it ultimately determines that the tax paid should be returned to consumers.


Mortgages that are signed as of November 10, 2018


At the time of buying your home or a property, if to make the payment you need a mortgage loan, the tax must be paid by the lender, that is, the bank.


In case the bank has withheld the amount necessary to meet the tax, it must return.


In case the bank tries to increase the commissions or the interest rate negotiated to face the tax, you can report it to the protection authority that will be created.


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