2. Income Tax Deductions in Spain
There are 17 autonomous communities or regions in Spain
and each has competency to regulate tax exemptions and
deductions within it’s territory.
3. Income Tax Deductions in Spain
However, the central state government also regulates income
taxes.
4. Income Tax Deductions in Spain
Both systems work together in a complex arrangement that
means that taxpayers pay a proportion of their taxes to the
central government and the remainder to their local
government.
5. Income Tax Deductions in Spain
So when we refer to a tax deduction available for a particular
type of income, that this may not be the whole story.
Additional deductions, with different qualifying criteria , may
also exist, at a local level. A list of the regional deductions
currently available can be found here.
6. Income Tax Deductions in Spain
A number of important deductions are available to those who
pay income tax and have dealings with property in Spain.
It must be said however, that perhaps the most important one
– deductions for investment in a family home – has recently
had its ambit reduced substantially.
7. Investment in the Principal Private Residence
This tax deduction is still available but only for those on
incomes if less than €24,107. For those acquiring homes from
January 1st 2011, the deduction is as follows:
8. Principal Private Residence Mortgage Relief
For those with a net income below €17,707 the deduction is
equal to 7.5% (plus any additional deduction approved at a
regional level, if any) of any mortgage used to purchase a
principal private residence up to a maximum taxable base of
€9,040 (i.e. 7.5% of 9,040)
9. Principal Private Residence Mortgage Relief
The deduction is also available when opening a special bank
account (cuenta vivienda) for the purpose of saving to buy a
home, at the same rate.
10. Principal Private Residence Mortgage Relief
Where the net income is between €17,707 and €24,107 then
the deduction is 7.5% (plus any regional deduction, if any) of
the following amount: 9.040 – 1,4125 x (net income –
17.707,20).
11. Principal Private Residence Mortgage Relief
Once again, the deduction is available when opening a special
bank account (cuenta vivienda) for the purpose of saving to
buy a home, at the same rate.
12. Principal Private Residence Mortgage Relief
Once again, the deduction is available when opening a special
bank account (cuenta vivienda) for the purpose of saving to
buy a home, at the same rate.
13. Homes bought before January 1st 2011
Where the home was acquired before this date, the old
deduction of 15% up to a maximum of €9,040 applies.
14. Exceptions to the Maximum Income Limit
Some regional governments permit those on higher incomes to
benefit from a tax deduction (available at the regional level in
addition to the state deduction)
15. Deductions in the Canary Islands
The government of the Canary Islands permits the following
deductions for the purchase of homes in the region:
1.15% on tax base up to €9,015 if net income €30k - €60k
1.55% on tax base up to €9,015 if net income €12k - €30k
1.75% on tax base up to €9,015 if net income < €12k
16. Deductions in Valencia
The regional government in Valencia, which has responsibility
for the Alicante area, permits the following deductions on
homes purchased after January 20th 2006:
3.3% to a maximum of €4,507 for the 2 years after purchase
1.65% to a maximum of €4,507 thereafter
17. Deductions in Madrid
The regional government in Madrid has opted to continue the
deductions as previously was the case before the change to
the law.
Accordingly there is currently a 15% deduction up to a
maximum of €9,040 for the purchase of a home.
18. Deductions in Madrid
If the home is of new construction an additional 1% may be
deducted with the same limits as for the purchase of a second-
hand property.
19. Deductions in Castilla La Mancha
An additional 1% above the state deduction for the purchase of
a principal private residence is available in Castilla la Mancha
where the net income of the individual is below €50,000
20. Deductions for Modifications made to the Home
Modifications and installations made to a principal private
residence so that it is made accessible to a disabled owner of
the property, or spouse or relative living there are tax
deductible.
21. Deductions for Modifications made to the Home
The maximum taxable base is €12,020 per annum and the
deductible rate is 10%.
The need to make improvements for the purpose of
accessibility must be certified by the competent authority.
22. Income Tax Deductions for Renting a Home
If a person is renting their principal private residence, they may
make deductions in the income tax as follows:
The rate is 10.05% and applies to a maximum base of €9,015
where the income is less than €12,000 per annum
23. Income Tax Deductions for Renting a Home
The maximum income to qualify for the deduction is €24,020
and a sliding scale applies until €12,000.
To calculate the deduction if net income is over €12,000 and
below €24,020 the following formula is used:
9,015 – [0.75 x (Net Income - €12,000)]
24. Income Tax Deductions for Home Refurbishment
Taxpayers may deduct 20% of investments in property
refurbishment made up until the end of 2012.
The maximum base is €6,750 which is applicable to those on
incomes up to €33k. A sliding scale reduces this amount to
zero as the income approaches a limit of €53k.
25. Income Tax Deductions for Home Refurbishment
This deduction has been extended to include refurbishments
carried out on properties other than the principal private
residence, including property rented out by the taxpayer (as
long as such refurbishment does not form part of the
taxpayer’s economic activity).
26. Income Tax Deductions for Home Refurbishment
The maximum deduction is limited to €20k over several years
and to those refurbishments that improve accessibility,
installations such as internet or digital television or those that
improve energy efficiency and reduced water usage
27. When seeking legal advice in Spain always make sure to get
information on your lawyer’s professional background as well
as the legal fees they will charge before you commit to using
their services.
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