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Practical Income Manual 2020.

Concept of acquisition and rehabilitation of habitual residence

Concept of acquiring habitual residence

The acquisition of a habitual residence, for the purposes of the deduction, is understood to be the acquisition in the legal sense of the right of ownership or full ownership of the same, even if this is shared, the legal transaction that originates it being indifferent. Thus, the acquisition may be made by sale, exchange, inheritance, legacy or donation. Therefore, the acquisition of bare ownership, usufruct or other property rights of enjoyment over the habitual residence is excluded from the concept of acquisition valid for the application of the deduction.

The deduction for the acquisition of a habitual residence may only be applied if the property had been legally acquired prior to January 1, 2013. That is, if prior to said date the contract (title) and the tradition or delivery of the home (mode) coincide.

Precisions :

  • In cases of marital annulment, divorce or judicial separation, the taxpayer may continue to take this deduction for the amounts paid in the tax period for the acquisition of what was their habitual residence during the term of the marriage, as long as they continue to have this condition for the common children and the parent in whose company they remain.

    You may also make a deduction for the amounts paid, if applicable, for the acquisition of the home that constitutes or will constitute your habitual residence, with the joint limit of 9,040 euros per year.

  • The right to apply the deduction for investment in a habitual residence is recognized even if one is not the owner of full ownership in cases in which the habitual residence was originally acquired in full ownership by the spouses pro undivided or for the conjugal partnership, and , constituting the habitual residence of both and their minor children, the dismemberment of the domain occurs, not voluntarily, but mortis causa due to the death of one of the spouses, and the residence continues to constitute the habitual residence of the family unit. See in this regard the Resolution of the TEAC of May 8, 2014 in an extraordinary appeal for unification of criteria.

  • In the event of termination of a condominium over the habitual residence as of January 1, 2013, if one of the parties obtains 100 percent of the residence, they will have the right to apply 100 percent of the deduction for acquisition of habitual residence , up to a total of 9,040 euros of base, provided that said deduction had been applied in a year prior to 2013 in the percentage corresponding to their participation in the condominium.

    In this case, the application of the deduction by the acquired part until 100% of the full ownership of the property is completed will be limited to the amount that the community member who is no longer the owner of the property would have had the right to deduct from the date of termination of the condominium. if said extinction had not taken place. The deduction will also be conditional on the fact that the community member who ceases to be the owner has not exhausted the possibility of continuing to take the deduction for the acquisition of a habitual residence on the date of termination of the condominium. See in this regard the Resolution of the TEAC of October 1, 2020 in extraordinary appeal for unification of criteria .

Concept of rehabilitation of habitual residence

Regulations: Art. 55.5 Personal Income Tax Regulation

For the purposes of this type of deduction, rehabilitation of a habitual residence is considered to be the works carried out there that have met any of the following requirements:

  1. That the works have been qualified or declared as protected actions in housing rehabilitation s, in the terms provided for in Royal Decree 1186/1998, of June 12, on financing measures of protected actions regarding housing and land of the 1998-2001 Plan ( BOE of 26); in Royal Decree 1/2002, of January 11, on financing measures for protected actions in housing and land of the 2001-2005 Plan ( BOE of 12); in Royal Decree 801/2005, of July 1, which approves the State Plan 2005-2008, to promote citizens' access to housing, in Royal Decree 2066/2008, of December 12, by which regulates the State Housing and Rehabilitation Plan 2009-2012 ( BOE of 24) ”; in Royal Decree 106/2018, of March 9, which regulates the State Housing Plan 2018-2021 ( BOE of 10).

  2. That the main purpose of the works is the reconstruction of the home through the consolidation and treatment of the structures, facades or roofs and other similar ones , provided that the overall cost of the rehabilitation operations exceeds of 25 percent of the acquisition price if the acquisition had been made during the two years immediately prior to the start of the rehabilitation works or, otherwise, of the market value of the home at the time of said start. For these purposes, the proportional part corresponding to the land will be deducted from the acquisition price or market value of the home.

Remember: The rehabilitation works of the habitual residence will give the right to the deduction when amounts for this concept have been paid prior to January 1, 2013, provided that the works have also been completed before January 1, 2017.