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V5444-16 23 December 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · deducción por inversión en vivienda habitual

Deduction for principal residence may be maintained when replacing a mortgage with a family loan

A taxpayer sought clarification on whether they could continue claiming the deduction for investment in their principal residence after replacing their original mortgage with a new interest-free family loan. The Directorate General for Tax (DGT) ruled that this is permissible, provided the new loan is used to repay the previous one and all legal requirements are met.

The question raised

A. Possibility of continuing to claim the deduction for the acquisition of a primary residence for the amounts paid monthly for the amortization of the new loan, as well as for the expenses incurred by the subrogation and cancellation of the mortgage. How the new loan must be justified.

The DGT's ruling

The substitution of one loan for another does not exhaust the right to the deduction for investment in the primary residence, as it only modifies the financing conditions. The installments and expenses of the new loan entitle the taxpayer to a deduction in the proportional part allocated to the amortization of the original loan. Regarding family loans, the connection with the lender, the purpose linked to the residence, and the justification of its repayment must be proven. With respect to loans between private individuals, it is exempt from Transfer Tax, but the borrower must file the tax return claiming said exemption.

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