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Practical Income Manual 2023.

For acquisition of habitual residence due to birth or adoption of children

Regulations: Articles 13 and 18.2 Consolidated Text of the legal provisions of the Community of Madrid regarding taxes transferred by the State, approved by Legislative Decree 1/2010, of October 21

Amount, temporal scope of application and maximum limit of the deduction

  • Total amount: 10 percent of the purchase price of homes acquired by taxpayers as a consequence of the birth or adoption of children .

    Important : The base of the deduction will be made up exclusively of those amounts intended to satisfy the actual purchase price of the home, plus the expenses and taxes inherent to said acquisition, such as direct and indirect taxes, registration, notary, etc., but not those expenses generated by the application and granting of the mortgage loan that finances its acquisition as they are not part of the price of the home.

  • Temporal scope and way of applying said amount: The total amount of the deduction will be prorated by tenths and will be applied in the tax period in which the acquisition occurs and the following nine.

  • Maximum annual limit: 1,546.50 euros, both in individual taxation and in joint taxation.

    Note: The amount of this deduction will be prorated in tenths and will be applied in the tax period in which the acquisition occurs and the following nine, without the applicable annual deduction exceeding 1,546.50 euros.

Requirements for applying the deduction

  • That the acquired home constitutes or will constitute the habitual residence of the taxpayer's family unit.

    For this purpose, habitual residence will be considered one that conforms to the definition and requirements established in the twenty-third Additional Provision of the Personal Income Tax Law , and in its implementing regulations, as drafted. effective as of January 1, 2013.

  • That the acquisition of the home occurs as of January 1, 2023 .

  • That the sum of the taxpayer's general tax base and savings, together with that corresponding to the rest of the members of his family unit , sum of boxes [0435] and [0460] of the declaration, do not exceed the amount in euros corresponding to multiplying by 30,930 the number of members of said family unit .

    The concept of family unit in Personal Income Tax is explained in Chapter 2.

    For the purposes of applying the deduction, the tax base of your family unit will be taken into account, in an aggregate manner, regardless of the existence or not of the obligation to declare. In the case of joint taxation, the tax base of said declaration will be taken into account for the purposes of the established limit.

  • The home must also be acquired in the following three years , counted from date to date, from the birth or adoption of a child of the taxpayer for which he has the right to the application of the minimum for descendants in the year in which said acquisition takes place and is effectively inhabited within a period of twelve months from such acquisition .

Loss of the right to deduct

Two situations must be distinguished.

  • Loss of the right to the deduction that remains to be applied within the ten-year period

    If the taxpayer transfers the home within the period between the acquisition year and the following nine years will lose the right to the remaining deduction in the tax period in which said transmission occurs and the following.

    The same will happen in that tax period in which the child born or adopted that gives rise to the deduction ceases to be part of the taxpayer's family unit.

  • Loss of the right to deductions made

    If the home is not effectively inhabited within a period of twelve months from its acquisition or construction or is not effectively inhabited for a minimum continuous period of three years, unless circumstances arise that necessarily require a change of address, the purchaser must present the complementary self-assessment referred to in the second paragraph of section 2 of article 122 of the LGT in order to restore the amounts deducted in previous years together to the corresponding late payment interest.

    Regarding the circumstances that necessarily require the change of address, see the twenty-third Additional Provision of the Personal Income Tax Law that establishes the concept of habitual residence.