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V1664-17 27 June 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · deducción por inversión en vivienda habitual

Life insurance premiums may be deductible if required for a mortgage loan

A taxpayer inquired whether life insurance premiums mandatorily linked to a mortgage loan can be included in the deduction for investment in the main residence. The Directorate General for Taxes (DGT) ruled that this is possible if the insurance policy is a condition set by the lender.

The question raised

Possibility of including in the deduction base the premiums paid for the aforementioned life insurance, which is inexcusably linked to the contracting of the mortgage loan used to finance the acquisition of the residence.

The DGT's ruling

Life insurance premiums may be included in the deduction base for investment in a primary residence provided that their procurement is a condition imposed by the lender. If the loan principal was only partially used for the acquisition of the residence, the premiums shall be included in the deduction base in the same proportion. Conversely, insurance policies that are not mandatory are not considered expenses for this deduction.

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