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Practical manual for Income Tax 2022.

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 :

  • 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.

  • The right to apply the deduction for investment in a habitual residence is recognized even if the owner of full ownership is not the case when it comes to cases in which the habitual residence was originally acquired in full ownership by the spouses in undivided ownership or for the marital partnership, and, constituting the habitual residence of both and their minor children, the dismemberment of the ownership occurs, not voluntarily, but mortis causa due to the death of one of the spouses, and the residence continues to constitute the habitual residence of the family unit. See in this regard the Resolution of the TEAC of May 8, 2014, Claim number 00/00990/2012 , issued in an extraordinary appeal for unification of criteria.

  • 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 the TEAC of October 1, 2020, Claim number 00/00561/2020 , filed in extraordinary appeal for unification of criteria .

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 Income Tax

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

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.