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Practical Income Manual 2023.

Concept of acquisition, construction, rehabilitation and expansion of the 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 it, 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 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 :

  • Marriage annulment, divorce or judicial separation.

    1. 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.

    2. Likewise, if the taxpayer, by virtue of a divorce decree, satisfies all the payments of the loan for the acquisition of the habitual residence that, at the time, was granted jointly to both spouses and for the repayment of which the two had been practicing before of January 1, 2013, the deduction for the acquisition of a habitual residence, you have the right to apply said deduction for the entire amounts paid for this concept even if you only own 50 percent of the home because the company has not been liquidated. of marital property, both in the event that the home continues to have habitual status for him and the joint children and in the event that the home has such status for the common children and the other parent. See in this regard the Resolution of TEAC of November 23, 2021. Claim number 00/00629/2021, relapsed into an extraordinary appeal in unification of criteria.

  • Dismemberment of the domain (usufruct and bare ownership) mortis causa, temporal limit of the right to deduction.

    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 undiviso or for the conjugal partnership and, Since it constitutes the habitual residence of both of them 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 house continues to constitute the habitual residence of the family unit. See in this regard the Resolution of TEAC of May 8, 2014. Claim number 00/00990/2012 , relapse into extraordinary appeal for unification of criteria.

    In cases in which the habitual residence was acquired before January 1, 2013 under the conditions indicated above (that is, in full ownership by both spouses pro undivided or for the conjugal partnership), and, after the death of one of them, the dismemberment of the domain occurs, with the widowed spouse acquiring the usufruct by inheritance, the application of the deduction for investment in habitual residence will depend on the date on which the death occurred:

    1. If the death occurred prior to January 1, 2013, the surviving spouse may apply the deduction for investment in habitual residence for the amounts paid, not only for the part of the property over which he or she has full ownership, but also for the part of the usufruct that you acquire as long as it continues to constitute your habitual residence

    2. If the death occurs after January 1, 2013, the surviving spouse can only apply the deduction for investment in habitual residence for the part of the property over which he or she has full ownership, while it will not apply to the usufruct that he or she acquires. the transitional deduction regime provided for in the eighteenth transitional provision of the Personal Income Tax Law and, consequently, you will not be able to make the deduction for investment in habitual residence for the amounts paid linked to said acquisition of usufruct.

  • Termination of the condominium after January 1, 2013.

    1. 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 TEAC of October 1, 2020. Claim number 00/00561/2020 , relapse in extraordinary appeal for unification of criteria.

    2. However, unlike the previous case, in the case of acquisition of a percentage of the habitual residence due to the death of the spouse, it is necessary to differentiate the part acquired by the dissolution of the matrimonial property regime, which does generate the right to deduction, from the part acquired by inheritance that will not give the right to deduction.

      In accordance with the above, in the case of two spouses, whose matrimonial property regime is community property, who are only owners of a single asset – habitual residence acquired before 2013 –, if one dies after January 1, 2013 and the survivor acquires the other half of the home by inheritance, paying 100 percent of the loan installments, he or she will not be able to take the deduction for investment in a habitual residence for 100 percent of the home after death - only for 50 percent of which it was already the owner prior to 2013 -, because the acquisition of the other half does not derive from the dissolution of the community property but from the inheritance, said acquisition occurring from 2013 onwards, and Therefore, once the deduction for investment in habitual residence has been eliminated, the eighteenth transitional provision of the Personal Income Tax Law will not apply, for failing to comply with the requirements of section 1, letter a). , of said provision.

Remember:

The taxpayer who uses external financing may continue to take the deduction for the amounts paid in the year in relation to the construction of the primary residence, provided that:

1 He would have paid amounts for the construction of his habitual residence prior to January 1, 2013.

2 Once the works are completed before March 20, 2021, as indicated above, the requirements for completion on time, occupation and effective and permanent residence have been met.

Concept of rehabilitation of habitual residence

Regulations: Art. 55.5 Regulation Personal Income Tax . writing as of 12-31-2012

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 action in the field of housing rehabilitation , in the terms provided for in Royal Decree 1186/1998, of June 12, on financing measures for protected actions regarding housing and land in the 1998-2001 Plan ( BOE of June 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 January 12); in Royal Decree 801/2005, of July 1, which approves the State Plan 2005-2008, to promote citizens' access to housing ( BOE of July 13 July), in Royal Decree 2066/2008, of December 12, which regulates the State Housing and Rehabilitation Plan 2009-2012" ( BOE of December 24); in Royal Decree 106/2018, of March 9, which regulates the State Housing Plan 2018-2021 ( BOE of March 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.

Concept of expansion of the habitual residence

Regulations: Art. 55.1 Regulation Personal Income Tax . writing as of 12-31-2012

An extension of a habitual residence is understood to be the increase in its habitable surface , produced by enclosing an uncovered part or by any other means, permanently and during all times of the year. Thus, within this concept it is understood to include both the acquisition of an adjacent home and a home located on an immediately higher or lower level, in order to join it to the habitual home and thus increase its habitable surface.

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