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V1595-20 26 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 can be maintained when replacing a mortgage loan

The applicant asks whether they can continue to claim tax relief for investment in their main residence after subrogating or changing their mortgage loan. The Directorate General for Taxes (DGT) responds that replacing one loan with another does not exhaust the right to the deduction, provided 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 repayment 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 of the new loan (principal repayment and interest) entitle the taxpayer to a deduction in the proportional part attributable to the repayment 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. If a cancellation occurs followed by the subsequent obtaining of credit without continuity between the two, the right to the deduction for the new financing would be lost.

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