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V0298-24 5 March 2024 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · deducción por inversión en vivienda habitual

Right to tax deduction for main residence investment maintained when replacing mortgage with a private loan

A taxpayer replaced part of their original mortgage with a private loan to repay it. The Directorate-General for Tax (DGT) ruled that this change in financing does not extinguish the right to the tax deduction, provided the new loan is used to amortise the previous one.

The question raised

Whether, after carrying out the described restructuring operation, due to the resulting form of indebtedness, the taxpayer will have the same right to deduct the amounts that they amortize or satisfy.

The DGT's ruling

The novation or substitution of one loan for another does not conclude the financing process nor exhaust the possibility of applying the deduction. The installments of the new loan shall entitle the taxpayer to a deduction in the proportional part attributable to the amortization of the original loan intended for the primary residence. The proportional part of the annuities corresponding to an increase in the principal intended for other purposes shall not be deductible. In this case, as it is a partial substitution, the right is maintained for the annuities of the new loan that are satisfied after canceling the previous mortgage.

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