Buying a home is a key moment for a person’s finances. It will probably be your biggest outlay. Along with the importation of the property, you will have to assume other expenses. Specifically, those involved in the notary, the Land Registry and taxes.
The tax charges when buying a home are focused on the Value Added Tax (VAT) and the Tax on Documented Legal Acts (IAJD), if it is a new home. In case of acquiring a second-hand property, the buyer must assume the Property Transfer Tax (ITP).
Despite the fact that the Personal Income Tax (IRPF) is not linked to the purchase and sale of a home, this operation must be reflected in the income statement and its tax treatment came from the use that is given to the property. new house.
The purchase of a home: without state deduction in Income
Until 2013, buying a home allowed part of its amount to be deducted from the Income. However, this state deduction no longer exists and can only be applied by those people who bought a home before 2013 and through a mortgage. In your case, the deduction will be up to 15% of the mortgage loan, but with a limit of 9,040 euros.
Despite the fact that this deduction no longer exists, most Autonomous Communities do maintain aid linked to the purchase of a home. However, the possible deductions are linked to requirements such as age -especially helps younger people- and location -with the aim of promoting the purchase of homes in rural areas-.
Second home purchase
The situation is different when the taxpayer buys his second home owned. That is, it is not his habitual residence. The Tax Agency considers habitual residence to be one that “constitutes the taxpayer’s residence for a continuous period of at least three years” or “that the taxpayer inhabits effectively and permanently, in a period not exceeding twelve months from the date of acquisition or completion of the works.
Otherwise, it will be considered a second residence, which will be taxed by personal income tax, although with different treatment depending on its purpose. If it is kept personally, that is to say for vacations or punctually, the second residence will be taxed at 2% of the cadastral value or 1.10% if the value was reviewed in the last 10 years.
This option is included in the ‘property income imputation’ box. And, specifically, it is applied to urban real estate and there are no effects on economic activities. In this box, in addition, any real property owned by the taxpayer will be added and that he has at his disposal “all or part of the year”, including shared accommodation.
When there is more than one owner, each one of the co-owners must declare as attributable income the amount that results from applying to the total income imputed to the property or right, the percentage that represents their participation in the ownership of the property.
buy to rent
On the other hand, in the case of buying a home that is going to be used for rent, it must be taken into account that the income obtained is declared as income from real estate capital. This is included in the general tax base, together with economic activities and work income.
For these situations, the Treasury does recognize deductions. The main deduction of 60% of the net yield obtained if the tenants use the rented home as permanent and main. This aid, therefore, will not be applied to homes intended for holiday or seasonal rental.
However, the Treasury recognizes the income obtained from the rental as economic activities when the owner has at least one person employed full-time. In addition, if it is a vacation rental and other services are provided -for example, laundry-, the Tax Agency also establishes that they are economic activities that must be taxed as income included in the general tax base of the IRPF.
