Buying a home is usually one of the most important steps in a person’s life, and it is often done with the help of parents or a partner. It must be taken into account that if it is a donation, the corresponding tax will have to be paid, although some communities allow gift tax bonuses. In the event that no money is donated, but the buyer’s solvency on the mortgage loan is reinforced, unexpected tax consequences may arise.
This is what notary María Cristina Clemente warns in a video published on Notaría Buendía’s social networks. The expert explains that the Treasury can interpret this situation as a hidden donation. Specifically, he points out that “The Treasury understands that there is a hidden donation if you buy your home alone and your parents or partner who does not buy sign with you as debtors in the mortgage loan deed”.
It is, as indicated, “a very common case” in practice, in which a young person, who wants to purchase their first home, goes to the bank and the bank demands that their parents or partner sign with them as debtors, instead of as simple guarantors, to reinforce the guarantee of the loan.
How to Avoid a Gift Tax Assessment
Clemente proposes a clear solution to avoid problems with the Tax Agency. The key would be in “formalize a loan between those parents or partner and that child or partner that must be made for the same interest rate and term as that of the mortgage loan”.
This loan can be formalized “by public deed or by private document, in both cases, zero tax cost”emphasizes the notary. In this way, the Treasury is prevented from considering that there is a free transfer of money or an economic advantage that must be taxed as a donation.
Furthermore, the notary warns that this measure not only prevents a possible complementary settlement at the time of purchase, but also future problems. According to him, this formalization avoids both “the current complementary settlement of the Treasury as a donation, but also the future one, when those parents or couple want to get out of that loan and the bank consents to it”.