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V1758-18 18 June 2018 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · deducción por inversión en vivienda habitual

Mortgage loan novation does not affect tax relief for main residence investment

A taxpayer inquired whether novating a mortgage loan to become the sole borrower affects their entitlement to tax relief for investment in their main residence. The Directorate General for Taxes (DGT) ruled that the novation has no impact on their Personal Income Tax (IRPF) treatment.

The question raised

Question posed: Impact of novation on taxation under Personal Income Tax (IRPF).

The DGT's ruling

The novation operation that consolidates a taxpayer's position as the sole borrower has no effect regarding their taxation under Personal Income Tax (IRPF). The right to the deduction for investment in the primary residence is linked to the ownership of full title to the property and to it being the primary residence. In loans with multiple borrowers, it is understood that installments are paid in equal parts, unless proven otherwise. For a taxpayer to deduct amounts exceeding their ideal share in the loan, they must prove the existence of a prior loan from other co-owners.

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