B Law & Tax
17 May 2024

The Central Economic-Administrative Tribunal (TEAC) has standardized criteria regarding the deduction for investment in a habitual residence not made prior to the year 2013

In its Resolution 00765/2023, dated April 22, 2024, the Central Economic-Administrative Tribunal (TEAC) has decided to unify criteria regarding the possible application of the deduction for investment in a habitual residence in years after 2012 for those taxpayers who purchased their habitual residence before January 1, 2013, and who did not use or report said deduction in any year before 2013 since its acquisition.

According to the transitional provision 18ª of the Personal Income Tax Law (LIRPF), to maintain the right to the deduction from January 1, 2013, among others, the following condition must be met:

The taxpayer must have applied the deduction for investment in a habitual residence in relation to the amounts paid for the acquisition or construction of said residence in a tax period prior to January 1, 2013. This condition will not apply if the deduction could not be applied due to the acquisition of a new habitual residence, provided that the amounts invested in it do not exceed both the price of the previous one, to the extent that it has been subject to deduction, and the exempt capital gain by reinvestment, if this situation occurs.

Well, regarding this condition, the TEAC has determined that those who have not used or reported the deduction before 2013 may do so if they have not filed a tax return because they are not obligated due to their income. And if they were obligated to file a tax return due to their income and did so, but did not have a full quota in any of those periods to apply it.

Taxpayers who have not used or reported the deduction before 2013, despite being obligated to file a tax return due to their income and having filed it, will not be able to apply the deduction if in any of those periods they had full quotas to which they could have applied the deduction.

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