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V1629-20 27 May 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · deducción por inversión en vivienda habitual

Full mortgage deduction unavailable if ownership is limited to 50% of the property

A taxpayer inquired whether they could claim the deduction for investment in their primary residence on the total amount of mortgage instalments paid, despite only owning 50% of the property. The Directorate General for Tax (DGT) ruled that the deduction is limited to the proportional share corresponding to their percentage of ownership.

The question raised

Regarding the eighteenth transitional provision of the Personal Income Tax Law stating that the deduction shall be applied based on the "amounts paid," whether it is possible, on the part of the taxpayer, to apply the deduction based on the totality of the amounts allocated to amortizing 100% of the loan securing their primary residence and not solely based on the 50% that would correspond to them by virtue of their participation in the loan and their ownership percentage of the residence.

The DGT's ruling

The deduction for investment in the primary residence applies to the amounts paid in the proportional part that each borrower has allocated from the borrowed capital to the acquisition of their respective undivided share of ownership. If a joint and several borrower pays more than half of the installments, they may only deduct up to the percentage corresponding to their ownership (in this case, 50%). The excess paid is considered a loan or gift in favor of the other co-owner.

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