Taxpayers may restart the deduction for primary residence if they move back in

The application of the deduction for investment in primary residence for properties acquired before January 1, 2013, has raised various doubts following the loss of primary residence status. Recently, the Dirección General de Tributos (DGT) has clarified the applicable tax treatment in cases where the taxpayer recovers residence in said property.

What the DGT has ruled

The inquiry analyzes whether a taxpayer is entitled to once again claim the deduction for investment in primary residence and whether they can request the rectification of non-prescribed tax returns in which the benefit was not applied despite meeting the requirements. The criteria establish that:

• Taxpayers who acquired their home before 2013 and have already claimed the deduction may continue to apply it under the transitional regime.
• If the property once again constitutes the taxpayer's primary residence, they may restart the practice of the deduction.
• For this new period, the deduction will be based on the amounts paid since the new commencement of residence.
• To consolidate these new deductions, the property must be inhabited effectively and permanently for at least three years.

What this means for you

If you are an individual who lost the right to the primary residence deduction because you ceased to reside in your property (acquired before 2013), the regulations allow you to recover this tax benefit if you re-establish your residence there. This new exercise of the deduction is not calculated on the total initial investment, but on the amounts paid from the moment the primary residence status is restored.

What you should do

Given this possibility, it is necessary to verify that the property meets the requirements of effective and permanent residence required by Personal Income Tax (IRPF) regulations. Compliance with this habitability requirement for a minimum period of three years is fundamental to consolidate the new deductions. It is recommended to analyze tax returns from non-prescribed periods to determine if there is a right to rectify them in case the residence requirements were met in previous years.