The Tax Agency opens the door to new personal income tax (IRPF) deductions for mortgage cancellations

What exactly has changed?

The Central Economic-Administrative Tribunal (TEAC), under the Tax Agency, has issued a ruling that modifies the criterion applied until now: if you purchased your home before 2013, you can still apply the old deduction for investment in your main residence (up to €9,040 per year).

Until now, the Tax Agency interpreted that if you sold your home and used the proceeds to pay off the mortgage, you could not deduct that final repayment on your IRPF, because it was considered part of the sale process rather than an investment.

The key point —according to the TEAC— is not the source of the money, but its use: if it is used to repay the mortgage linked to a property that was eligible for the deduction, that amount should be included in the deductible base.

 

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What does this mean in practice for taxpayers?

Many people who sold their homes in recent years were unable to deduct the final repayment of the loan on their IRPF. With this ruling:

• They can include that repayment as part of the deduction base.
• They can claim refunds for non-prescribed tax years (usually 2021–2024).
• They could recover up to €1,356 per year.

Simplified example

Concept	Before the change	Now with TEAC criterion
Payments made during the year	€3,000	€3,000
Final repayment (paid with proceeds from sale)	❌ Not deductible	✅ Deductible
Total deductible base	€3,000	€9,040 (maximum limit)
IRPF deduction	€450	€1,356

Who can benefit?

You could be affected if:

• You purchased your home before January 1, 2013
• You sold the property later and repaid the mortgage with part of the sale proceeds
• You were applying the main residence deduction
• You can document the payments and the use of the funds

If the Tax Agency denied your deduction or you simply did not apply it due to lack of knowledge, you can request a correction of your tax return.

How can I claim?

1. Review your IRPF returns from 2021 to 2024 (non-prescribed years).
2. Gather documentation: purchase deed, sale deed, bank certificate of loan cancellation.
3. Submit a request for correction to the Tax Agency with the supporting documents.

There is no need to start a contentious procedure: a simple self-assessment correction is sufficient.

Tips to maximize the deduction

• If you have costs linked to the loan (cancellation fees, etc.), check if they can be included in the deductible base.
• Ensure your property always met the main residence requirement (minimum three years, except in specific cases).
• Even if you repaid the mortgage on the same day of the sale, it is still deductible: the property counts as main residence until the moment of transfer.

The TEAC change represents a clear opportunity for thousands of taxpayers. Do you want us to review your case and submit the correction on your behalf? Our tax team can analyze your situation and handle the entire process with the Tax Agency.