The Directorate General of Taxes ratifies its traditional doctrine, resolving the doubts that had arisen after the Supreme Court ruling of 2020 referring to condominium extinctions with express release of co-debtors.
The traditional doctrine of the Directorate General of Taxes (DGT) (contained, among others, in its resolutions V1859-05, of 22 September, V1141-09, of 19 May or V0015-18, of 9 January) in the acquisition of real estate with subrogation by the buyer in the mortgage debt was that no taxation was generated in the modality of stamp duty tax (AJD) of the Transfer Tax and Stamp Duty Tax (ITPyAJD) and this has been confirmed in its recent resolution V0745-25, of 28 April 2025.
The relevance of this new resolution lies in the uncertainty generated on this issue after the publication of the Supreme Court Judgment of 20 May 2020 (appeal 3696/2017). In that judgment, the court concluded that the express release of co-debtors in cases of extinction of condominium generated a new taxable event in the AJD, given that there was a subjective modification with independent registration. This criterion was subsequently supported by various DGT resolutions (among others, resolutions V3116-20, V3397-20, V2822-21, V1148-22 or V0051-23), raising doubts as to whether this approach could be extended to other similar situations, in particular, to real estate sales with mortgage subrogation.
The recent resolution V0745-25 mentioned above confirms, however, that mortgage subrogation in real estate sales constitutes a mere substitution of the original debtor, without affecting the essential conditions of the loan or altering the existing mortgage guarantee. Therefore, there is no new additional autonomous registration that justifies independent taxation by AJD, in accordance with the requirements established in article 31.2 of the ITPyAJD Law.
Thus, as we have said, the DGT follows its traditional doctrine in relation to the non-subjection to AJD of mortgage subrogation that take place in real estate sales transactions, without the aforementioned judgment of the Supreme Court and subsequent resolutions on the specific case of condominium terminations with express release of co-debtors having modified this criterion; in line with what the DGT itself already advanced in an internal report of December 13, 2022, prepared at the request of the Region of Madrid. This report clarified that the cases analyzed by the Supreme Court in the 2020 judgment were different from real estate sales with simple mortgage subrogation, as a result of which numerous settlements issued by the Region of Madrid (in which the additional payment of AJD had been required in mortgage subrogation operations for the substitution of the debtor) were annulled.
From a practical point of view, this confirmation avoids tax costs in a market already characterized by high prices and significant tax burdens, providing legal certainty and interpretative clarity.
However, this disparity of criteria for cases that, although different, have similarities, makes it advisable that each transaction be analyzed in detail (even more so, taking into account that the distinction made by the DGT between some transactions and others could contradict the reasoning of the Supreme Court in its 2020 ruling). For these purposes, it should not be forgotten that not being subject to AJD requires that there are no modifications to the conditions of the original mortgage loan, such as increases in the principal, changes in mortgage liability, alterations in the repayment schedule or system or variations in ancillary guarantees. In these cases, there could be a new autonomous registration that would generate a new tax for AJD.
Guillermo Avilés and Gonzalo Rincón de Pablo
