BackIndeed, the Central Economic-Administrative Court (TEAC), in its Resolution 00765/2023, dated April 22, 2024, has decided to unify criteria in relation to the possible application of the deduction for investment in primary residence in the years after 2012 for those taxpayers who acquired their primary residence before January 1, 2013 and who did not apply or record said deduction in any year prior to 2013 since the acquisition.
Several Regional Economic-Administrative Courts have issued divergent opinions on this issue, which finally led the TEAC to unify its criteria, at the request of the Regional Economic-Administrative Court of Cataluña.
It is important to keep in mind that the deduction for investment in habitual residence, which existed in Spain previously, disappeared as of January 1, 2013. A transitory regime was established in the 18th transitory provision of the Personal Income Tax Law 35/2006 (LIRPF), which extended the validity of the deduction for those who were already entitled to it. Thanks to this, many taxpayers still enjoy this deduction. According to said transitory provision, in order to continue enjoying the deduction as from January 1, 2013, two conditions must be met:
- The taxpayer must have acquired his principal residence before January 1, 2013.
- The taxpayer must have applied the deduction for investment in principal residence in relation to the payments made for the purchase or construction of that home in a tax period prior to January 1, 2013.The latter, unless he/she was unable to apply the deduction due to the acquisition of a new habitual residence whose cost does not exceed both the price of the previous one, subject to deduction, and the capital gain exempted by reinvestment, if applicable.
The determination of the Central Economic-Administrative Court (TEAC) focuses on this second condition. It understands that the purpose of the transitional regime is to protect taxpayers who, prior to the elimination of the deduction for the acquisition of a principal residence, had already purchased a home and were deducting the payments made, with the exception of the specific cases mentioned, in order to avoid being suddenly deprived of a deduction to which they were entitled. Following the approach of the Supreme Court, the TEAC interprets that:
“the doubts that may arise regarding the rules regulating this tax deduction for housing assistance must be resolved (…) in the most favorable sense for its recognition and protection (…) being consistent with this the Statement of Reasons of Law 35/2006, which expressly alludes to the fact that it is reasons of social cohesion that determine the continuity of the tax support for the acquisition of the habitual residence (…)”.
Therefore, the TEAC has established the following:
– Those who have not applied or registered the deduction before 2013 may do so in the following cases;
- They did not file a return due to not being obliged for the income received.
- Being obliged to declare for income and not having done so, they did not have full quota in any of those periods to be able to apply it.
– Those who have not used or registered the deduction before 2013 will not be able to apply it, if they were obliged to declare for income and did not do so, but did not apply the deduction before 2013, despite having had full quotas in any of those periods to do so.
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