Deduction for investment in primary residence: ownership is an indispensable requirement

The application of the deduction for investment in a primary residence under the transitional regime of Personal Income Tax (IRPF) requires strict compliance with specific conditions. A recent binding ruling from the Directorate General of Taxes (DGT) has delimited the scope of this right, focusing on the necessity of holding ownership of the property.

What the DGT has ruled

The inquiry raised whether a taxpayer could apply the deduction for investment in a primary residence despite not being the owner of the property, arguing that they were responsible for the payment of the mortgage loan linked to the property. The DGT has ruled that it is not possible to access this tax benefit under these circumstances.

The criteria establish that, for the deduction to proceed under the transitional regime, the taxpayer must meet two concurrent requirements:

• Acquisition of the residence: The taxpayer must acquire the property, which includes obtaining at least an undivided share of its full ownership.
• Habitual residence: The property must constitute the habitual residence of the taxpayer.

In the case analyzed, as there is no ownership of the residence, the taxpayer does not meet the first essential requirement, invalidating the possibility of applying the deduction, regardless of whether they assume the financial burden of the mortgage loan.

What this means for you

This criterion directly affects individuals intending to apply the deduction for investment in a primary residence under the transitional regime. The regulations of Law 35/2006 (LIRPF) do not allow the mere fact of paying mortgage installments to substitute the condition of being the owner or co-owner of the property. If you reside in a home but do not appear as the owner in the title deed, you will not be able to count those expenses toward the tax deduction.

What you should do

It is fundamental to verify the ownership structure in the purchase deed before making any such declaration. The absence of ownership, even if a loan agreement exists in the taxpayer's name, prevents the exercise of this tax right. It is recommended to assess the legal status of the property and the acquisition structure to avoid potential requests for information from the Tax Administration.