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Practical manual for Income Tax 2023.

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

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

Amount, time 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 basis for the deduction will consist 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 do not form part of the price of the home.

  • Time frame and method of applying said amount: The total amount of the deduction will be prorated in tenths and will be applied in the tax period in which the acquisition occurs and the following nine.

  • Annual maximum 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 takes place and the following nine, without the applicable annual deduction being able to exceed 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, a habitual residence will be considered to be one that meets the definition and requirements established in the Twenty- Additional Provision of the Income Tax Law, and in its implementing regulations, in its version in force since January 1, 2013.

  • That the acquisition of the home takes place from January 1, 2023 .

  • That the sum of the general tax base and the taxpayer's savings, together with that corresponding to the rest of the members of his family unit , sum of boxes [0435] and [0460] of the declaration, does 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 the IRPF is explained in Chapter 2.

    For the purposes of applying the deduction, the taxable base of your family unit will be taken into account in an aggregate manner, regardless of whether or not there is an obligation to file a tax return. In the case of joint taxation, the taxable base of said declaration will be the one taken into account for the purposes of the established limit.

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

Loss of the right to deduct

There are two situations to be distinguished.

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

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

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

  • Loss of the right to deductions made

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

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