Tax advantages regarding my home

The tax advantages regarding a home must be approached from three main points of view:

  • Advantages when purchasing a property.
  • Possible deductions for buying a home.
  • If I rent a house, can I still benefit from tax advantages?

Tax advantages of Rental Property – home purchase

For this reason, we are going to see each of the figures individually, in such a way that, when I acquire a property, there are two possibilities of acquisition , that it be a new house or that it be second-hand or second hand.

First-build housing, relative savings

If I buy a first-build home, that is, a new home, I will pay VAT and Documented Legal Acts and as it is the purchase of a home, VAT of 10% may be applied to me, which makes it a tax rate lower than the rate general 21% and I would already be saving taxes. Different tax rates for second-hand homes according to the CCAA. In the event that what you acquire is a second transmission, what we usually call a second-hand house, we have to pay the Property Transfer Tax and it is paid.

Be aware that in most autonomous states, Tax benefits of Rental Property apply when you acquire a home for the buyer’s habitual residence and are subject to different taxes depending on your age. Therefore, when making a purchase, you should check the regulations of the autonomous state in which you are purchasing to see if you can apply a lower tax rate and get tax incentives.

Self-assessment of IRPF in habitual residence

Secondly, we have the deduction for habitual residence, which unfortunately only a few can benefit from. This is due to the fact that the regulations establish that only taxpayers who have acquired their habitual residence or paid amounts for the construction of the same will have the right to apply the deduction for investment in habitual residence for the amounts paid in the period in question. 

In addition, in any case, in order to apply the transitional deduction regime, taxpayers are required to have applied the deduction for said dwelling in 2021 or in previous years, so at this time, only those who meet these requirements can apply this transitional regime. . However, it is important to take it into account and that taxpayers who can do so do not forget to apply it and include it in their personal income tax return.

Tax advantages for housing rental

And lastly, we must focus on housing rentals , which offer two tax advantages , one at the state level and the other at the regional level.

Tax advantages in renting at the state level

In order to apply tax advantages at the state level, the following must be met:

  • Until 31-12-2021, the taxpayer could deduct 10.05% of the amounts paid in the tax period for the rental of the habitual residence.
  • As of 1-1-2020, such deduction has been eliminated without prejudice to the fact that taxpayers who meet the following requirements can continue to apply it :

Have entered into a lease prior to 1-1-2022.

In relation to said contract, they have paid, prior to said date, amounts for the rental of their habitual residence. Have been entitled to the deduction for rent of the habitual residence in relation to the amounts paid for the rent of said dwelling in a tax period accrued prior to 1-1-2022. Therefore, if the requirements are not met, the state deduction cannot be applied.

Autonomous deductions in housing

And finally, we would have the regional deduction that would depend on the regulations of each Autonomous Community, in such a way that each one requires certain requirements to be able to be applied, so each case must be reviewed in detail, in order to determine whether or not we can apply it.

Don’t you meet any requirements? Alternatives to monetize

Regardless of all of the above, another alternative to obtain tax benefits from a property may be to rent it either temporarily or indefinitely. With this option we will obtain some extra income that in any case will have to be declared in the self-assessment of personal income tax. At the tax level, it is usually more advantageous to rent it as a habitual residence than a seasonal rental. Since the Tax Administration rewards rents whose spirit is permanence with high reductions.

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