The 2023 Income Campaign has already begun, and it has done so with some new features. The tax changes in housing introduced this year may provide a small break for property owners. It is fundamental to know them, but also mind that not all of them apply to the income statement due before July 1.
News and tax changes in housing
The tax changes in housing affect two very different issues: deductions for renovations and reductions for renting properties. Let's detail what they consist of.
Deductions for improvement works
The novelty in this case is the extension of deductions for rehabilitation works aimed at improving the energy efficiency of residential properties. This extension goes until December 31, 2024, and implies the possibility of applying a 60% reduction of the amount invested in these improvements.
It applies to both regular and rental homes. The requirement is to reduce the property's non-renewable energy consumption by at least 30% or improve its energy rating to achieve an A or B rating.
Reduction in personal income tax for owners of rental housing
The second of the tax changes in housing has to do with rent, an issue that has raised many doubts after the approval of the new Housing Law. According to this, the reductions applicable to rental income will be the following:
• The general reduction goes from 60% to 50%. However, this change applies only to agreements signed after May 26, 2023, the date of entry into force of the law. Those who signed before that date can still effectuate the 60% reduction.
• A 60% reduction may be applied in the case of any rehabilitation work done in the two years immediately before signing the rental contract.
• The reduction increases to 70% in rentals for young people and the same for stressed areas.
• This reduction will be 90% if the home is in a stressed area and the rental income is reduced by 5% compared to the previous contract.
Nevertheless, don't forget that these tax changes came into force on January 1, 2024. Therefore, they do not apply when preparing the Income Tax Return due this year because it corresponds to 2023.
Other tax changes in housing
In addition to those mentioned, there are some other changes. Firstly, it is the imputation of real estate income. In general, 2% continues to get charged over the cadastral value. However, the exceptions that may apply the 1.1% include those properties whose revised value came into effect from January 2012.
Besides, we must add bonuses that some regions have introduced in the Donation and Inheritance Tax, which imply a notable tax reduction when inheriting a home.
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