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V3532-20 10 December 2020 · 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 principal residence maintained when subrogating or novating a mortgage loan

The taxpayer asks whether replacing an existing mortgage with a new one (via novation or subrogation) preserves the right to the tax deduction for investment in their principal residence. The DGT rules that modifying financing conditions 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 in 2020, due to the resulting form of indebtedness, the taxpayer will have the same right to deduct the amounts that they amortize or satisfy. Whether any prior communication must be made to the Tax Administration.

The DGT's ruling

The subrogation or substitution of a loan, including its extension, does not conclude the financing process nor exhaust the possibility of applying the deduction. 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 dwelling. However, if a debt cancellation occurs followed by the subsequent obtaining of credit without continuity between the two, the right to the deduction for the new financing would be lost. The extension of the principal shall not be subject to deduction in the part that is not attributable to the acquisition of the dwelling.

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