Did you know that your home can be a source of savings on your tax return? There are a number of deductible expenses in your habitual residence that can help you save when you file your tax return with the tax agency.
Of course, they are not universal. These are the cases in which your home will help you pay less income tax.
There are a number of deductible expenses in your habitual residence that can help you pay less income tax.
Deduction for primary residence (only for purchases made before 2013)
It is possible to deduct income tax for buying a house, but only if you bought it before 2013. If this is your case, you can deduct up to 15% of what you pay per year on the mortgage, up to a maximum of 9,040 euros per year, because yes, mortgages are tax deductible.
Can mortgage insurance be deducted? Yes, provided that such insurance was mandatory when taking out the mortgage or helped to reduce the interest rate. In other words, it is included in the mortgage contract.
In addition to this general deduction, there are also other regional deductions that depend on each region. In fact, in the Basque Country and Navarre, you can even claim a tax deduction if you bought the house after 2013.
Rental deduction (only for rentals prior to 2015)
Another deduction with a deadline at the state level is the deduction for those who live in rented accommodation. When filing tax returns, only leases signed before 2015 and their extensions can be deducted.
And that is not the only restriction on the rental deduction. There are also limits based on the taxable base, which cannot exceed 24,000 euros (around 30,000 euros of salary income).
The deduction is 10.05% of the rent you have paid as long as you are listed in the contract, although this percentage only applies to those with a base of less than 17,707.2 euros. The percentage to be deducted is reduced until it disappears at the aforementioned 24,000 euros.
In addition to this general deduction, there are some autonomous communities that have their own tax breaks for renting as a tenant.
If you are the one who puts your house up for rent
In this case, rather than actual deductions, we must talk about deductible expenses on the income you receive from renting out your home. In other words, when filing your tax return, the Treasury allows you to subtract a series of expenses from the rental of the home.
These are the expenses related to renting out the house and include things like:
• Interest and financing costs for the acquisition or improvement of a home. That is, the mortgage to buy a home or the mortgage to buy and renovate a home.
• Interest and financing costs for furniture and appliances.
• Taxes and fees such as IBI.
• Expenses for formalizing the lease, such as those of the real estate agency.
• Expenses for the legal defense of the home and its performance.
• Maintenance and repair expenses, which are different from improvements you make to your home and cannot be deducted.
• Service and supply expenses, as long as you pay for them.
• The depreciation of the property and the goods it contains (about 3% of the construction value due to wear and tear). This includes the depreciation of the furniture in the house, for example.
• Administration, surveillance, concierge and other property-related services expenses, including community fees.
• Home insurance premiums.
Home energy improvement reforms
This is a deduction for renovations that improve the energy efficiency of the home and reduce energy consumption. The percentage of the deduction and its amount depend directly on the type of renovation you carry out. The only “catch” is that this deduction has an expiration date and will only be available during the remainder of 2023.
These are the three options offered by the Tax Agency:
• Deduction for improvement works that reduce the demand for heating and cooling. It allows you to deduct up to 20% with a maximum of 5,000 euros per year on works that reduce the demand for heating and cooling by 7%, both in your home and in a house rented as a habitual residence.
• Deduction for improvement works that reduce the consumption of non-renewable primary energy . It allows a deduction of up to 40% of the cost of the work and a maximum of 7,500 euros per fiscal year, for renovations that reduce the consumption of non-renewable primary energy by 30% or help achieve an energy rating of “A” or “B” for the home.
• Deduction for energy rehabilitation works in buildings. This deduction is intended for works in residential communities and is one of those that the RER Plan helps to achieve. It is the largest deduction, up to 60% of the expenditure with a maximum of 5,000 euros per year and 15,000 euros in total.
Deductible expenses as a self-employed person
Finally, self-employed workers can also deduct certain housing expenses, although these expenses must meet certain requirements.
The most important ones are that:
• They must be linked to your economic activity.
• They must be justified.
• They must be registered in your accounting.
From there, it is possible to deduct the rent for the premises where the activity is carried out. If it is also the habitual residence, it will be necessary to have a double rental contract as a residence and as an office.
From there, it is also possible to deduct household supplies, although only a percentage of the expenditure on the surface of the home used for economic activity. In addition, this area will have to be well defined.
As you can see, your home can help you pay less taxes, although with certain limitations.
