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V3027-23 21 November 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 when replacing a mortgage loan

The applicant asks whether replacing an existing mortgage with a new loan that includes an increase in the principal amount preserves the right to the tax deduction for investment in the main residence. The Directorate General for Tax (DGT) rules that substituting a loan does not exhaust the right to the deduction, provided the new loan is used to repay the previous one.

The question raised

Whether, after performing the restructuring operation through the cancellation and new contracting of a loan, the taxpayer will have the same right to deduct the amounts they amortize or satisfy, in the proportional part corresponding to the original acquisition cost plus the expenses related solely to the change in financing, or whether they may apply the deduction for the totality of the amounts linked to the new loan, which would include the portion corresponding to its increase.

The DGT's ruling

The novation, subrogation, or substitution of a loan, including with an increase in principal, does not conclude the financing process nor exhaust the deduction, provided that the resulting loan is used for the amortization of the previous one. The installments and expenses of the new loan are deductible in the proportional part attributable to the original loan. If there is an increase in principal, only the portion intended to cover the cancellation costs of the original loan shall be deductible; the portion intended for other purposes is not deductible. To maintain the right, the cancellation and the new contracting must occur simultaneously.

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