The possibility of reintroducing the income tax (IRPF) deduction for the purchase of a primary residence, eliminated over a decade ago, is re-emerging in political negotiations. The Executive has shown willingness to study Junts' proposal to reinstate mortgage-related tax incentives in exchange for passing the new rental decree. This measure could translate into savings of over €1,700 annually in income tax declarations for certain taxpayers.
The negotiation, still ongoing and without a final agreement, has reignited the significant debate in Spanish housing policy regarding the return of fiscal aid for primary home purchases. Junts' proposal revives part of the deduction scheme that was in place for decades and disappeared in 2013, when Mariano Rajoy's government eliminated the general deduction for primary residences amidst the economic crisis and fiscal adjustments driven by the Treasury at the time.
According to the initiative registered by Carles Puigdemont's party, taxpayers could deduct 15% of mortgage-related expenses, with a maximum limit of €11,630 annually. Applying this percentage, the maximum tax saving would be around €1,744 per year on the income tax return. The measure would include not only mortgage loan payments but also interest, mandatory linked insurance, and other financing costs associated with the property.
Sources from Sumar have indicated they view the proposal favorably if it helps unlock the extraordinary extension of rental contracts, while reminding that any fiscal modification ultimately depends on the Ministry of Finance. The deduction for primary home purchase was for years one of the most used tax advantages for homeowners in Spain, allowing a 15% deduction on amounts allocated to acquiring a primary residence on a maximum base of €9,040 annually, resulting in savings of up to €1,356 in income tax.
This deduction was generally in effect until January 1, 2013. Since then, only those who purchased their homes before that date and were already benefiting from it can continue to apply it, according to the Tax Agency's current transitional regime. The proposal now being negotiated would increase the maximum deductible limit compared to the old model and expand certain concepts associated with mortgage loans. Furthermore, Junts proposes that the deduction could apply to both primary residences and properties rented out as permanent residences, excluding tourist flats or temporary rentals.
The possibility of reinstating tax incentives for home purchases comes at a particularly sensitive time for the real estate market. The Executive needs parliamentary support to approve a new decree extending rental contracts expiring in 2026 and 2027, after Junts, along with PP and Vox, rejected the first text in Congress. The Minister of Economy, Carlos Cuerpo, expressed optimism this week about reaching agreements on housing and taxation. Meanwhile, Sumar has softened its initial rejection of property-linked tax bonuses to facilitate a pact with Catalan independentists.
The potential return of mortgage tax breaks now reopens the debate on the role of fiscal incentives in the housing market. For years, various economic bodies questioned these aids, believing they could contribute to rising real estate prices. However, the sharp increase in housing access costs and rising mortgage payments have brought these measures back to the center of political discussion. For now, the Executive insists that no definitive agreement has been reached, but the mere fact that the Government is reconsidering a mortgage deduction eliminated over a decade ago anticipates a significant shift in the debate on housing, taxation, and access to homeownership in Spain.
