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Practical manual for Income Tax 2023.

Concept of acquisition, construction, rehabilitation and expansion of the habitual residence

Concept of acquisition of habitual residence

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

The deduction for the acquisition of a primary residence may be applied if the property was legally acquired prior to 1 January 2013. That is, if prior to that date the contract (title) and the transfer or delivery of the property (method) occur.

Clarifications :

  • Marriage annulment, divorce or judicial separation.

    1. In the event of annulment of marriage, divorce or legal separation, the taxpayer may continue to apply this deduction for the amounts paid in the tax period for the acquisition of what was his or her habitual residence during the marriage, provided that this condition continues to apply to the common children and the parent in whose company they remain.

      You may also deduct any amounts paid for the purchase of a home that is or will be your habitual residence, with a 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 the termination of a joint ownership of a primary residence as of 1 January 2013, if one of the parties obtains 100% of the residence, they will be entitled to apply 100% of the deduction for the acquisition of a primary residence, up to a total of 9,040 euros as a base, provided that said deduction was applied in a year prior to 2013 in the percentage corresponding to their participation in the joint ownership.

      In this case, the application of the deduction for the acquired part until completing 100% of the full ownership of the property will have as a limit the amount that the co-owner who ceases to be the owner of the property would have had the right to deduct from the date of termination of the condominium if said termination had not taken place. The deduction will also be conditional on the fact that the co-owner who ceases to be the owner has not exhausted the possibility of continuing to apply the deduction for the acquisition of a habitual residence by 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 apply the deduction for the amounts paid in the year in relation to the construction of the habitual residence, provided that:

1 Had paid amounts for the construction of the habitual residence prior to January 1, 2013.

2 Once the works have been 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 housing

Regulations: Art. 55.5 Regulation Personal Income Tax . Edited on 31-12-2012

For the purposes of this type of deduction, renovation of a habitual residence is considered to be any work carried out therein that has 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 in the field of housing and land of 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 matters of the 2001-2005 Plan ( BOE of January 12); in Royal Decree 801/2005, of July 1, approving the State Plan 2005-2008, to promote citizens' access to housing ( BOE of July 13), in Royal Decree 2066/2008, of December 12, regulating the State Plan for Housing and Rehabilitation 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 works have as their main objective the reconstruction of the dwelling by means of the consolidation and treatment of the structures, facades or roofs and other similar , provided that the overall cost of the rehabilitation operations exceeds 25% 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, the market value of the dwelling at the time of said start. For these purposes, the proportional part corresponding to the land will be deducted from the purchase price or market value of the home.

Concept of extension of the habitual residence

Regulations: Art. 55.1 Regulation Personal Income Tax . Edited on 31-12-2012

An extension of a habitual residence is understood to be the increase in its habitable surface , produced by enclosing the uncovered part or by any other means, permanently and during all times of the year. Thus, this concept includes both the acquisition of an adjoining dwelling and a dwelling located on an immediately higher or lower level, with the aim of joining it to the habitual dwelling and thus increasing its habitable surface area.

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