Personal Income Tax deduction for a main home after marital separation, under both the separate-property and community-property regimes
This article reviews the tax treatment of the main-home concept for Personal Income Tax deduction purposes in cases of marital separation. The first step is to identify the matrimonial property regime. The Spanish Civil Code recognises two different systems: community property and separate property.
Under the community-property regime, profits and gains, as well as debts, are shared by both spouses from the time of marriage. Thus, if they acquire a home after marrying, it belongs to both of them.
Under the separate-property regime, each spouse owns their own assets. For example, a home acquired before the marriage remains the sole property of the spouse who bought it, even after the relationship ends.
However, even where a home is the separate property of one spouse, that spouse may not recover its use immediately after divorce. The Civil Code provides that use of the property may be assigned for a period considered reasonable to the non-owner spouse, where the circumstances make this advisable and that spouse has the greater need for protection. This requires either the agreement of both parties or judicial authorisation, and the arrangement is always time-limited. This temporary assignment does not change ownership of the property.
A separate issue is the award of the property to one spouse as compensation.
Requirements for the main-home acquisition deduction after separation where one spouse acquires the other spouse’s 50% share
From 1 January 2013, to qualify for the transitional regime for the deduction for investment in a main home, the taxpayer generally had to have claimed the deduction for amounts paid to acquire that home in a tax period ending before 1 January 2013. An exception applied where Article 68(1)(2) of the Act, in the wording in force on 31 December 2012, applied.
The Spanish Central Economic-Administrative Tribunal (TEAC), in its decision of 15 September 2015 in an extraordinary appeal for unification of criteria, held that for tax benefits linked to a main home, where ownership is acquired in undivided shares and the taxpayer has lived in the home continuously since acquiring it, the three-year period for determining whether the property qualifies as a main home runs from the date the undivided share was acquired. The later date on which the remaining share was acquired, completing 100% ownership of the jointly owned property, is irrelevant for this purpose.
However, to claim the main-home deduction for each 50% share acquired, the requirements of the Eighteenth Transitional Provision must be met: the home must have been acquired before 1 January 2013 and the taxpayer must have claimed the home deduction before that date.
Legislation and guidance
- Eighteenth Transitional Provision of Law 35/2006 of 28 November, as amended by Law 16/2012 of 27 December.
- Binding ruling V0761-16 of the Directorate-General for Taxation.
- TEAC decision of 10 September 2015.
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