Homeowners may restart the deduction for investment in their primary residence upon returning to Spain

The possibility of applying the deduction for investment in a primary residence for properties acquired before 2013 has raised doubts among taxpayers who, after a period of absence, return to reside in their property in Spain. The Directorate General of Taxes (DGT) has recently clarified the tax treatment applicable in these return scenarios.

What the DGT has resolved

The DGT establishes that taxpayers who already applied the deduction for the acquisition of their home before Law 16/2012 entered into force may benefit from the transitional regime. In the event that said home once again constitutes the taxpayer's primary residence, they may restart the application of the deduction for the amounts paid from that new commencement.

For these new deductions to be consolidated, the regulations require that the home becomes the primary residence again through effective and permanent use for a minimum period of three years.

What this means for you

If you are an individual who owns a home acquired before 2013 and has resided outside of Spain, your tax situation may change upon your return. The criteria confirm that the right to the deduction is not lost definitively by the fact of having ceased to reside in the home, but is rather suspended.

Upon recovering primary residence in the property, you may once again apply the deduction for new payments made, provided that the residency requirements are met. This scenario is relevant for those profiles who have maintained their real estate assets in the country while residing abroad.

What you should do

In the event of a possible return to primary residence in your own home, it is necessary to verify the following points:

• Check that the home was acquired before the deadline established in the current regulations.
• Ensure that the use of the home is effective and permanent to comply with the three-year residency requirement.
• Correctly document the change of residence to justify the restart of the deduction before the Tax Administration.

Each situation of return and real estate ownership presents particularities that require an individualized technical assessment.