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V2604-23 27 September 2023 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · deducción por inversión en vivienda habitual

Right to tax deduction for main residence investment maintained if old loan is cancelled and new one is taken out simultaneously

A taxpayer inquired whether switching banks by cancelling an existing mortgage and taking out a new one for their main residence would preserve their right to the tax deduction and if the associated costs are deductible. The Directorate General for Tax (DGT) ruled that if the operations are carried out simultaneously, the right to the deduction remains intact and the related expenses are deductible.

The question raised

Whether, after performing the restructuring operation through cancellation and new loan contracting, the same right to deduct will be held for the amounts it amortizes or satisfies. Whether the expenses generated by the operation are deductible.

The DGT's ruling

The novation, subrogation, or substitution of a loan does not exhaust the possibilities of applying the deduction, provided that the new loan is intended to amortize the previous one. If the cancellation and the signing of the new contract are carried out in the same simultaneous act, the annuities, interest, and cancellation expenses are deductible. However, if a cancellation occurs and subsequently, without a direct connection, a new loan is contracted, the right to the deduction for the new financing would be lost. The portion of the principal intended for other purposes unrelated to the dwelling shall not be deductible.

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