Four-year deadline to maintain the deduction for investment in primary residence

The Directorate General of Taxes (DGT) has issued a relevant ruling regarding the application of the transitional regime for the deduction for investment in a primary residence within Personal Income Tax (IRPF). The issue focuses on determining whether it is possible to begin applying this deduction when the construction of the home extends beyond the time limits established by the regulations.

What the DGT has ruled

The inquiry analyzes the possibility of applying the deduction for investment in a primary residence after the start of construction. According to the DGT's criteria, for a taxpayer to benefit from the transitional regime, they must have acquired the home or paid amounts before 2013, complying with the provisions of Article 68.1.2º of the IRPF Law.

In cases of construction, the regulations require that the works be completed within a period not exceeding four years from the start of the investment. The administration defines the start of the investment as the moment the first amount for the deduction is paid or the amount from the housing account is transferred. If the completion of the works occurs after exceeding said four-year period, the taxpayer will not be able to apply the transitional regime.

What this means for you

This ruling directly affects individuals who have made payments intended for the construction of their home in periods prior to 2013. If the execution of the work has extended beyond four years from the first disbursement or transfer of funds, the right to apply the deduction under the transitional regime is lost, even if the initial payments were made by the legal deadline.

What you should do

It is necessary to verify the exact date of the first investment made and compare it with the date of completion of the construction. In the case of long-term construction projects, it is fundamental to document every disbursement and compliance with deadlines to determine the applicability of the current regulations. Each situation must be analyzed individually to confirm whether the temporality requirements demanded by Law 35/2006 and Law 16/2012 are met.