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V0674-21 23 March 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · deducción por inversión en vivienda habitual

The right to the deduction for primary residence is maintained following a subrogation or loan extension, with nuances

The taxpayer asks whether they can continue to deduct the investment in their primary residence after subrogating their mortgage and increasing the principal. The DGT responds that the modification of financing conditions does not exhaust the right to the deduction, provided that the new loan is used to amortize the previous one.

The question raised

Question posed: Whether, after performing the restructuring operation under study, the resulting form of indebtedness will grant the same right to deduct the amounts that are amortized or satisfied by the taxpayer.

The DGT's ruling

The novation, subrogation, or substitution of a loan, even with an increase in the principal, does not conclude the financing process nor exhaust 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 intended for the residence. If there is an extension, only the portion covering the cancellation costs of the original loan shall be deductible, excluding the portion intended for other purposes. The deduction is not permitted if the debt is canceled and a new credit is obtained without a connection between the two.

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