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V2135-20 25 June 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · deducción por inversión en vivienda habitual

Deduction for principal residence can be maintained when replacing or extending a mortgage loan

The applicant asks whether they can continue to claim deductions for the repayment and interest of a new loan that replaces a previous one for their principal residence. The Directorate General for Taxes (DGT) responds that replacing or extending a loan does not exhaust the right to the deduction, provided the new loan is used to repay the previous one.

The question raised

Possibility of continuing to claim the deduction for the acquisition of a primary residence for the amounts paid for the amortization of the principal and interest of the new loan, as well as for the expenses incurred by the change of loan.

The DGT's ruling

The substitution or extension of a loan does not conclude the financing process nor exhaust the deduction, as it only modifies the agreed conditions. The installments of the new loan entitle the taxpayer to a deduction in the proportional part attributable to the amortization of the original loan. If the extension of the principal serves to cover the cancellation costs of the previous loan, it shall also be subject to deduction. However, if the debt is cancelled and a new credit is obtained without continuity between the two, the right to the deduction for the new financing would be lost.

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