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V0843-19 23 April 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · gastos de constitución de hipoteca

Reimbursement of mortgage establishment costs does not constitute income for Personal Income Tax (IRPF) purposes

A taxpayer inquired whether the judicial reimbursement of mortgage establishment costs should be taxed under Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that such restitution does not constitute income; however, it requires the adjustment of the deduction for investment in the main residence if that deduction was previously applied to those amounts.

The question raised

Knowing that default interest is taxed as a capital gain, the inquiry concerns the taxation under Personal Income Tax (IRPF) of the refunded amounts corresponding to mortgage establishment costs.

The DGT's ruling

The restitution of amounts paid for mortgage loan establishment costs does not constitute income subject to Personal Income Tax (IRPF). However, if such amounts formed part of the base for the deduction for investment in the primary residence, the right to said deduction is lost. This necessitates a regularization of the situation by adding the unduly deducted amounts to the net tax liability for the tax year in which the requirements were breached.

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