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V0694-22 30 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 principal residence investment maintained after loan subrogation or novation

A taxpayer inquired whether they could continue to claim the tax deduction for investment in their principal residence after changing lenders through subrogation or a new loan agreement. The Directorate General for Taxes (DGT) ruled that modifying financing conditions does not exhaust the right to the deduction, provided the new loan is used to repay the previous one.

The question raised

Whether, after performing the restructuring operation through subrogation or cancellation and new contracting, the resulting form of indebtedness will grant the same right to deduct the amounts that are amortized or satisfied thereby.

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 resulting loan entitle the taxpayer to a deduction in the proportional part attributable to the amortization of the original loan intended for the dwelling. If there is an increase in the principal, only the portion intended to cover the cancellation costs of the previous loan shall be deductible; the portion intended for other purposes shall not be eligible for deduction. The loss of the right would occur if the debt is canceled and a new credit is obtained without a link between the two.

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