Summary
Tax deduction for main residence (only for purchases prior to 2013)
It's possible to claim tax relief on home purchases through your income tax return , but only if you bought the property before 2013. If this applies to you, you can deduct up to 15% of your annual mortgage payments, up to a maximum of €9,040 per year. Yes, mortgages are tax-deductible.Can mortgage insurance be tax-deductible? Yes, provided that the insurance was mandatory when taking out the mortgage or helped to reduce the interest rate. In other words, it must be included in the mortgage contract.
In addition to this general deduction, there are also regional deductions that vary by region. In fact, in the Basque Country and Navarre, you can claim a tax deduction even if you bought the house after 2013.
Rental deduction (only for rentals prior to 2015)
Another deduction with a state-level deadline is the deduction for renters . When filing your tax return, you can only claim deductions for rental agreements signed before 2015 and any extensions thereof.And that's not the only restriction on the rental deduction. There are also limits based on taxable income, which cannot exceed €24,000 (approximately €30,000 in salary income).
The deduction is 10.05% of the rent you have paid, provided you are named on the contract, although this percentage only applies to those with a base income below €17,707.20. The deductible percentage gradually decreases until it disappears at the aforementioned €24,000.
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 putting your house up for rent
In this case, rather than deductions per se, we should talk about deductible expenses on the income you receive from renting your home. In other words, when filing your tax return, the tax authorities allow you to subtract a series of expenses from the rental income.These are the expenses related to putting the house up for rent and include things like:
- Interest and financing costs for the purchase or improvement of a home. In other words, a mortgage to buy a house or a mortgage to buy and renovate a house.
- Interest and financing costs for furniture and appliances.
- Taxes and fees such as the IBI (Property Tax).
- Expenses for formalizing the lease, such as those of the real estate agency.
- Expenses for the legal defense of the property and its income.
- Maintenance and repair expenses, which are different from home improvements that cannot be deducted.
- Expenses for services and supplies, provided you pay them.
- Depreciation of the property and its contents (approximately 3% of the construction value due to wear and tear). This includes depreciation of household furniture, for example.
- Administration, security, porter and other services related to the property, including community expenses.
- Home insurance premiums.
Home energy efficiency improvements
This is a tax deduction for renovations that improve the energy efficiency of your home and reduce energy consumption. The percentage and amount of the deduction 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 for the remainder of 2023.These are the three options offered by the Tax Agency :
- Tax deduction for home improvement works that reduce heating and cooling demand . This allows you to deduct up to 20%, with a maximum of €5,000 per year, for works that reduce heating and cooling demand by 7%, whether in your own home or in a rented property used as your primary residence.
- Tax deduction for improvement works that reduce non-renewable primary energy consumption . This allows you to deduct up to 40% of the cost of the work and a maximum of €7,500 per tax year, for renovations that reduce non-renewable primary energy consumption by 30% or help achieve an energy rating of “A” or “B” for the home.
- Tax deduction for energy efficiency renovations of buildings . This deduction is intended for renovations in apartment buildings and is one of those that the RER Plan helps to obtain. It is the largest deduction, up to 60% of the cost with a maximum of €5,000 per year and €15,000 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 their economic activity.
- They must be justified.
- They must be recorded in your accounting records.
From there, it's possible to deduct the rent for the premises where the business activity takes place. If it's also your primary residence, you'll need two separate rental agreements, one for your home and one for your office.
From there, it's also possible to deduct household utilities, although only a percentage of the expenditure based on the area of the home used for business. Furthermore, this area must be clearly defined.
As you can see, your home can help you pay less tax, although with certain limitations.
