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V0727-24 16 April 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 if current mortgage is cancelled and a new one is taken out simultaneously

A taxpayer inquired whether switching banks by cancelling an existing mortgage and taking out a new one preserves the right to the tax deduction for investment in the main residence, and whether the transaction costs are deductible. The Directorate General of Taxes (DGT) ruled that if the operations are carried out simultaneously, the right is maintained and the associated costs are deductible.

The question raised

Whether, after performing the restructuring operation through cancellation and new loan contracting, the same right to deduct will be held for the amounts it amortizes or satisfies. Whether the expenses generated by the operation are deductible.

The DGT's ruling

The novation, subrogation, or substitution of a loan does not exhaust the possibilities of applying the deduction, provided that the new loan is intended for the amortization of the previous one. If the cancellation and the signing of the new contract are carried out in a single simultaneous act, the annuities, interest, and expenses of the operation (including the registry cancellation) are deductible. However, the proportional part of the installments corresponding to an increase in the principal intended for purposes other than the acquisition of the dwelling shall not be deductible. If the cancellation and the new contracting occur at different times and without a direct connection, the right to the deduction for the new financing would be lost.

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