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V0593-22 21 March 2022 · 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 a mortgage loan

The applicant asks whether they can continue to claim a tax deduction for investment in their main residence after repaying their current loan and taking out a new one to finance the transaction. The Directorate General for Tax (DGT) responds that the replacement or novation of a loan does not exhaust the right to the deduction, provided that the new loan is used to amortise the previous one.

The question raised

Whether, after performing the cancellation and new contracting operation, due to the resulting form of indebtedness, the taxpayer will have the same right to deduct the amounts they amortize or satisfy, in the proportional part corresponding to the original acquisition cost plus the expenses related to the change in financing.

The DGT's ruling

The novation, subrogation, or substitution of a loan does not conclude the financing process nor exhaust the possibility of applying the deduction. The installments of the new loan entitle the taxpayer to a deduction in the proportional part attributable to the amortization of the original loan. If the principal is increased to cover the cancellation and formalization expenses of the new loan, such part is also deductible. The part of the new principal intended for other purposes unrelated to the acquisition of the dwelling shall not be deductible.

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