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V1544-20 22 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 a mortgage loan

A taxpayer has enquired whether they can continue to claim tax relief for investment in their main residence after subrogating or replacing their current mortgage loan with one offering better terms. The Directorate General for Taxes (DGT) has ruled that replacing one loan with another does not exhaust the right to the deduction, provided that the new loan is used to repay the previous one.

The question raised

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

The DGT's ruling

The replacement of a loan, including its extension, does not conclude the financing process nor exhaust the possibility of applying the deduction. The installments (principal and interest) and expenses of the new loan entitle the taxpayer to a deduction in the proportional part attributable to the amortization of the original loan. However, the proportional part of the annuities corresponding to the increase in principal due to the extension shall not be subject to deduction. In the event of cancellation and subsequent obtaining of credit without continuity, the right to the deduction for the new financing would be lost.

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