From Tomarial we want to indicate a series of recommendations to reduce the result of your personal income tax return for the year 2019, whose period of self-assessment will include the months of April to June 2020:
Income received for real estate leases
The income obtained from the rental of real estate is considered as full returns on real estate capital. All expenses necessary to obtain income will be deductible, among others: interest and financing expenses, community expenses, repairs, amortization of the property, IBI, garbage rate, balances of doubtful collection and Professional services expenses. Therefore, we recommend that you keep the proof of all the previous expenses, in order to proceed with your deduction.
Likewise, in the event that the property is assigned to the lessee's home, the calculated net return may be reduced by 60%.
Compensation of capital losses from previous years
In the event that there are capital losses pending compensation in the last four years, these can be compensated with the capital gains obtained in the year 2019, as a result of the transfer of assets, such as real estate, shares, investment funds, etc. .
Pension plans, dependency insurance and long-term savings plans
The amounts contributed to pension plans reduce the tax base of the tax. The reduction limit will be the lower amount between the following two:
- 30% of the sum of the income from work and economic activities received in 2019.
- 8.000 euros.
Therefore, from a fiscal point of view, it is recommended that the contributions do not exceed the maximum reduction limit. Additionally, in certain cases it is also possible to reduce the tax base for contributions made by the spouse or in favor of persons with disabilities, with the limits of 2.500 euros and 10.000 euros, respectively.
In the case of rescue of the pension plan, the amount will be taxed as work performance. It is advisable to rescue the pension plan in the form of capital, in order to enjoy, in certain cases, a 40% reduction.
The regulations also provide reductions for contributions to private insurance that cover the risk of severe dependence or heavy dependence, with the maximum limit of 8.000 euros. Finally, the returns obtained by the investment in individual long-term life insurance (SIALP) or in individual long-term savings accounts (CIALP) will be exempt, provided that the following requirements are met: the maximum annual contribution does not exceed 5.000 euros, the amounts are not available in 5 years, and are collected for their total amount in the form of capital.
Contributions to protected assets of persons with disabilities
In the event that contributions have been made to the protected assets of a person with a disability by their spouse, relatives up to the third degree inclusive, or by those who were in charge of them under guardianship or foster care, they will be entitled to reduce the taxpayer's tax base, with the maximum limit of 10.000 euros per year.
Regular housing and other assets
The IRPF regulations establish the following tax benefits related to the taxpayer's habitual residence, as well as with other assets:
- Those taxpayers who transmit their habitual dwelling and reinvest the amounts obtained in a new habitual dwelling within two years, may consider totally or partially exempt the capital gain obtained, depending on the amount of the reinvestment. In addition to the above, the capital gain obtained by taxpayers over 65 years of age who transmit their habitual residence will be exempt, without the need for reinvestment.
- The profit obtained by taxpayers over 65 years of age for the transfer of any asset will also be exempt from taxation, provided that the amount obtained is reinvested, within six months, in the constitution of an annuity in their favor, with the limit of 240.000 euros.
- Although the deduction for investment in habitual housing was abolished in 2013, taxpayers who acquired their habitual residence prior to December 31, 2012 can still deduct the amounts paid in the year for the acquisition or rehabilitation of the dwelling, with a maximum of 9.040 euros. It is necessary to have continued applying this deduction in all previous years.
- In the same way as in the previous case, the deduction for rental of habitual housing was abolished in 2015. However, taxpayers who have paid amounts for the rental of habitual housing, who have incomes below 24.107,20 euros and sign their Lease agreement prior to the said date, are entitled to the application of the deduction. It is necessary to have continued applying this deduction in all previous years.
- Finally, there is also an autonomous deduction in the Valencian Community for the amounts paid in the year for the lease of the habitual residence. The amount of the deduction, as well as its limit, depends on the age and degree of disability of the lessee. One of the requirements for the enjoyment of the deduction is that the taxpayer has submitted the corresponding self-assessment of the tax on property transfers and documented legal acts (hereinafter, TPO) derived from the lease. We remind that as of March 6, 2019, housing leases for stable and permanent use are exempt from TPO; however, the presentation of the corresponding self-assessment is still mandatory.
Deductions
Donations made to foundations, associations and NGOs, as well as membership fees to political parties, may be deducted in the tax quota. The percentage of deduction will depend on the condition of the recipient, the amount of the deduction, and whether donations have been made in previous years.
Likewise, 30% of the amounts paid in the period may also be deducted for the subscription of shares or participations in newly or newly created companies, with a limit of 60.000 euros.
For any questions or additional clarification, Feel free to contact us for advice..
