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V2804-23 16 October 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 following mortgage novation

A taxpayer inquired whether the right to claim the tax deduction for investment in their main residence is preserved after novating a variable-rate mortgage to a fixed-rate one. The Directorate General for Tax (DGT) ruled that novation does not exhaust deduction eligibility, provided the new loan is used to repay the previous one.

The question raised

Whether, after performing the aforementioned novation operation, the taxpayer will have the same right to deduct the amounts amortized or satisfied under the new loan.

The DGT's ruling

The novation, subrogation, or substitution of a loan does not conclude the financing process nor exhaust the right to deduction, as it only modifies the agreed conditions. The amortization installments and interest of the new loan shall entitle the taxpayer to deduction in the proportional part attributable to the original loan intended for the dwelling. If there is an increase in the principal, only the portion intended to cover the cancellation costs of the original loan shall be deductible, excluding the portion intended for other purposes. To maintain the right, the operation must be simultaneous; if the debt is cancelled and a new loan is contracted at different times without connection, the right is lost.

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