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V3025-20 7 October 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · ganancias patrimoniales

Only 50% of debt repayment using separate funds qualifies as reinvestment in principal residence

A taxpayer inquired whether using personal funds to repay debt on a property acquired under community property regime would allow the entire amount to be treated as reinvestment. The Directorate General for Taxes (DGT) ruled that only half of the amount paid is considered such for the purpose of the tax exemption.

The question raised

Whether the entirety of the amount originating from the taxpayer's separate funds intended to partially amortize the debt incurred to finance the 2018 acquisition of the dwelling constituting the habitual family residence, carried out while the community property regime was in effect, must be imputed exclusively to him in its entirety, thus having the status of reinvestment in its entirety, or whether, conversely, it must be imputed equally with his spouse, understanding only 50 percent to be reinvested.

The DGT's ruling

By allocating separate funds to amortize a debt of the community property regime, a credit right arises against the community property for 50% of the amount. Therefore, only the portion that consolidates the ownership of the undivided interest attributable to the spouse (the 50%) is considered a reinvestment. The other 50% is considered a loan in favor of the spouse and does not constitute a reinvestment.

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