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V1779-22 27 July 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · deducción por inversión en vivienda habitual

Right to tax relief for main residence investment maintained after loan subrogation or replacement

A taxpayer inquired whether the right to claim tax relief for investment in their main residence is preserved when changing a mortgage through subrogation or a new contract. The Directorate General for Taxes (DGT) ruled that modifying financing conditions does not preclude the deduction, provided the new loan is used to repay the previous one.

The question raised

Whether, after performing the restructuring operation through subrogation or cancellation and new contracting, by virtue of the resulting form of indebtedness, the taxpayer will have the same right to deduct the amounts they amortize or satisfy. Whether the expenses generated by the operation are deductible. Whether, to demonstrate continuity between the loans, it is necessary to pay the cancellation costs with part of the principal of the new loan.

The DGT's ruling

The novation, subrogation, or substitution of a loan does not conclude the financing process nor exhaust the deduction, as it only modifies the agreed terms. The installments and interest of the new loan, as well as the cancellation expenses of the previous one, are deductible in the proportional part attributable to the amortization of the original loan. If there is an increase in the principal, only the portion intended to cover the cancellation costs of the original loan shall be deductible. To maintain the right, the new financing must be linked to the cancellation of the previous loan, which does not necessarily require that the expenses be paid with the principal of the new loan.

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