The 2014 Income Tax campaign is now underway. The tax reforms passed last June modified significant issues related to housing, but what is new in filing income tax this year?
As there are several different issues affecting housing, this week we’re going to discuss deductions for buying or renting a home, and next week we’ll cover those related to income from property.
1-Deduction for the purchase of primary residence.
Housing purchases cannot be deducted on 2014 taxes, except for taxpayers who purchased their home or made some payment towards it before 1 January 2013. Those who purchased homes in 2012 or before may deduct up to 15% of the amount invested, for a maximum of 9,040 euros.
In the Basque County and Navarra, which have their own tax regime, the deduction for the purchase of a primary residence is still valid after January 2013.
2- Deduction for rehabilitation of primary residence.
Payments made with regard to the taxpayer’s primary residence may be deducted as long as they meet one of the following criteria:
- Work done to enlarge the liveable space of the primary residence.
- Rehabilitation work.
- Adaptations for the disabled.
This deduction will only be applicable if the rehabilitation work will be finished before 1 January 2017. In this case, the deduction is also 15%, up to 9,040 euros, for enlargements and rehabilitation, while the percentage can be up to 20% for adaptation for the disabled (25% in Catalonia) up to a maximum of 12,080 euros.
Taxpayers who purchased their home after 1 January 2013 are not eligible for the national deduction.
- Deduction for rental of primary residence
In 2014, rent paid for primary residences is still deductible, for leases signed in 2014 or before.
The deduction is 10.05% of the yearly rent for taxpayers earning less than 17,707.20 euros. The percentage decreases for those who earn more and is not applicable for taxpayers earning more than 24,107.20 euros.
With the tax reforms, leases signed after 1 January 2015 will no longer benefit from this fiscal advantage.
We’ll cover how the tax reforms affect property owners, net income from rental property, and taxation on property revenue and losses on Thursday 16 April in the REAL ESTATE NEWS section.
SOURCES: AEAT |Fotocasa | Idealista
PHOTOGRAPHS: Fotocasa
