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V1329-20 11 May 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · deducción por inversión en vivienda habitual

Tax relief for main residence may be maintained when replacing or extending a mortgage loan

A taxpayer inquired whether they could continue to claim tax relief for investment in their main residence after subrogating or extending their mortgage loan. The Directorate General for Taxes (DGT) ruled that the relief remains applicable to the portion of the new loan used to repay the previous one.

The question raised

Possibility of continuing to claim a deduction for the acquisition of a primary residence for the amounts paid for the amortization of the principal and the interest of the new loan, as well as for the expenses incurred by the change of loan, and in what proportion.

The DGT's ruling

The substitution or expansion of a loan does not exhaust the right to deduction, as it only modifies the financing conditions. The installments of the new loan shall entitle the taxpayer to a deduction in the proportional part attributable to the amortization of the original loan. However, the portion of the new capital that exceeds the outstanding principal of the previous loan shall not be subject to deduction, regardless of its purpose. In the event of cancellation and the obtaining of new credit without continuity between the two, the right to deduction for the new financing would be lost.

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