One of the handicaps of taking out a mortgage to buy a house today is that this type of loan will not be deductible in the income tax return. The deduction for investment in housing was eliminated as of January 2013, although Law 16/2012, of December 27, introduced a transitional regime that allows citizens who had been applying this tax benefit to continue doing so. However, other taxpayers can also deduct taxes on their tax returns for the installments paid on their mortgage loans.
Those who signed their mortgage before 2013 can deduct up to 15% of the payments made for the loan they signed to purchase their primary home, with an annual limit of 9,040 euros. "This limit will be unique for all of the investment concepts outlined and will be applied in the same amount in joint taxation," says Carmen Elena Valero, speaker of the tax commission of the Official College of Administrative Managers.
The deduction also extends to refinanced mortgages, as long as the prerequisites are met, "since it is considered that the loan remains the same even though its conditions have been modified," the mortgage consultancy Bayteca clarifies. However, it is important to keep in mind that the capital increase will only give the right to the deduction on the initial amount of the loan.
Likewise, those who had paid amounts for the construction of their habitual residence before January 1, 2013 and the completion of the works had occurred within the deadlines established by the applicable personal income tax regulations will be entitled to this tax relief. Furthermore, if amounts have been paid prior to this date for rehabilitation works, adaptation for people with disabilities or expansion of the habitual residence, as long as the intervention has been completed before January 1, 2017, you will also be entitled to this reduction fiscal.
Furthermore, in communities such as the Basque Country and Navarra, there are special provisions that allow the deduction to continue to apply even for purchases after 2013, under certain specific conditions.
As for the state deduction for rent, it disappeared since January 1, 2015, although those who had been deducting their habitual residence rented on that date were able to benefit from the transitional regime that allows them to continue enjoying it. To do this, the contract must be prior to 2015, even if successive extensions have been signed or another contract has been signed that is considered a continuation of the initial lease contract.
How much does the rent of habitual residence deduct? "You will be able to deduct 10.05% of the amounts paid in the tax period for the rental of your habitual residence, provided that your tax base is less than €24,107.20 per year and, without prejudice to the deduction for renting your habitual residence that , if applicable, for each exercise, your community has approved," responds economist and administrative manager Carmen Elena Valero.
In Catalonia, for example, taxpayers whose tax base does not exceed 20,000 euros per year in individual taxation or 30,000 in joint taxation, can deduct 10% of the amount paid for the rental of their habitual residence, if the amounts paid exceed 10% of their net returns. The deduction is reserved for the following taxpayers and has limits of 300 euros per year in individual taxation and 600 in joint taxation for taxpayers who are in any of these situations at the end of the year: they are 32 years old or younger, they have been unemployed at least 183 days of exercise, have a degree of disability equal to or greater than 65%, or are widowed and have reached the age of 65 or older. The limit is also 600 euros per year for taxpayers who, at the end of the year, belonged to a large or single-parent family.
"The deduction can only be applied once, even if the same taxpayer finds himself in several of the aforementioned situations," continues Valero. Furthermore, for the same home you cannot deduct a total of more than 600 euros. If in the same household more than one taxpayer has the right to the deduction, each one can deduct the amount obtained by dividing the amount resulting from the application of 10% of the total expense or the maximum limit of 600 euros, if applicable, between the number of filers entitled to the deduction. This tax benefit is conditional on the fact of recording the lessor's NIF in the personal income tax self-assessment.
