Wednesday, 27 February 2013

Can you just hand over a property to a bank because you can’t pay the mortgage?

SPAIN / ANDALUCÍA The short answer is: no, not quite, but things are getting better. One of the reasons for tightening the law is that banks have always benefited more from mortgages than the individual borrower have (with the obvious exception of the actual acquisition of a property, which may rise in value, or not). In the heady days of free-for-all mortgages (never free, and never for all), when hipotecas (mortgages) were given out to individuals at 110 or 120 per cent of the (over)estimated value of the property, it was in fact the developers, builders and sometimes private individuals who obtained vast benefits thanks to what the Organización Profesional de Inspectores de Hacienda del Estado (IHE, or State Tax Inspectors Professional Organization, a sort of union) called IVA (VAT) fraud. The fraud, or tax evasion, consisted not only of evading the payment of VAT required for transferring a property, but also its deduction taken later by banks. (A more detailed article on this subject will soon be available from

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