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V1921-17 19 July 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 as a condition of a mortgage loan

A taxpayer inquired whether life insurance premiums mandated by a bank to grant a mortgage can be included in the deduction for investment in the main residence. The Directorate General for Taxes (DGT) ruled that this is possible if it can be proven that taking out said insurance is a condition imposed by the lender.

The question raised

Possibility of integrating into 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 dwelling.

The DGT's ruling

Property insurance premiums covering specific risks on the mortgaged asset form part of the deduction base. In the case of life insurance, its inclusion in financing expenses is permitted provided that its procurement is among the lender's conditions. The taxpayer must irrefutably prove that the insurance is a condition of the loan through valid means of evidence.

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