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V1484-22 21 June 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · deducción por inversión en vivienda habitual

Right to main residence tax deduction maintained after mortgage subrogation or replacement

A taxpayer inquired whether the tax deduction for investment in their main residence remains valid after changing their mortgage through subrogation or a new loan agreement. The Directorate General for Taxes (DGT) ruled that modifying financing conditions does not extinguish 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.

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 new loan shall entitle the taxpayer to a deduction in the proportional part attributable to the amortization of the original loan intended for the primary residence. In the event of an increase in the principal, only the portion intended to cover the cancellation costs of the previous loan shall be deductible; any excess intended for other purposes shall not be eligible for deduction. A cancellation followed by a new contract without a connection between the two would imply the loss of the right to the deduction for the new financing.

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