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V3000-20 5 October 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · deducción por inversión en vivienda habitual

Right to main residence tax deduction maintained when subrogating or replacing a mortgage loan

The applicant asks whether the right to deduct amortised amounts is preserved when subrogating or replacing an existing mortgage with a new one. The Directorate General for Tax (DGT) rules that subrogation or substitution does not preclude the deduction, provided the new loan is used to repay the previous one.

The question raised

Whether, after subrogating or canceling the loan in 2020 for a new one, the taxpayer will have the same right to deduct the amounts amortized.

The DGT's ruling

The subrogation or substitution of a loan, including its extension, does not conclude the financing process nor exhaust the deduction, as it only modifies the agreed conditions. The installments of the new loan shall entitle the taxpayer to a deduction in the proportional part attributable to the amortization of the original loan intended for the primary residence. However, a debt cancellation followed by the obtaining of new credit without continuity would be understood as distinct operations, resulting in the loss of the right to the deduction for the new financing.

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