Below, we review the most advisable tax deductions and recommendations when it comes to reducing the tax burden of our income tax for individuals.

Please read the following definitions carefully, you may not know some of them:

  1. Joint Declaration
  2. Large family deduction
  3. Deduction for single parent family with two children
  4. Deduction for disabled descendants
  5. Deduction for dependent relatives in the ascending line
  6. Deduction for maternity
  7. Deduction of childcare costs and purchase of school supplies (CCVV)
  8. Deduction for renting a main residence (CCVV)
  9. First purchase of main taxpayer’s home equal to or less than 35 years. (CCVV)
  10. Deduction for investment in a newly created company
  11. Exemption for capital gains over 65 years of age
  12. Deduction for double taxation
  13. Exemption for capital gains from reinvestment in the habitual residence
  14. Deduction of mortgage expenses constituted before 2013.
  15. Deduction for donations
  16. Deduction for political party affiliation
  17. Deduction for contributions to pension plans
  18. For obtaining income derived from the rental of housing whose income does not exceed the reference price of private rentals. (CCVV)
  19. Deduction of conservation and improvement works of the habitual residence (CCVV)
  20. Deduction for acquisition of habitual residence by persons with disabilities
  21. Exemption for annuity insurance

1) Joint Declaration.

In general, the Income Tax return is filed individually. However, the persons integrated in a family unit, can choose, if they wish, to declare jointly, as long as all their members are taxpayers for this tax.

A reduction in the tax base of 3,400 euros per year is established for joint taxation in the family unit modality composed of couples who are not legally separated.

2) Large family deduction.

They will be entitled to a deduction of up to 1,200 euros for being an ascendant, or an orphaned sibling of a father and mother who is part of a large family in accordance with Law 40/2003 of 18 November on the protection of large families.

If a large family is classified as a special category in the aforementioned Law, this deduction will be increased by 100 per cent. This increase will not be taken into account for the purposes of the limit on social security contributions.

Important: The condition of large family is accredited by the official title. The taxpayer must have the information of the number of the official title, the category and date of effects.

Once the condition of large family is recognized, it will take effect from the date of presentation of the application for recognition or renewal of the official title.

3) Deduction for single parent family with two children.

They will be entitled to a deduction of up to 1,200 euros for having the status of legally separated or unmarried ascendant, with two children not entitled to receive annuities for maintenance and for whom they are entitled to the full minimum for descendants.

This deduction will reduce the differential tax liability. Therefore, if your return results in a refund, it will increase the amount of the refund and if the return results in a positive return, it will reduce the amount to be paid.

4) Deduction for dependent disabled descendants.

They will be entitled to receive a deduction of up to 1,200 euros per year, for each disabled descendant entitled to the application of the minimums for each descendant.

Taxpayers shall be entitled to receive the deduction in proportion to the number of months in which the situation of disability and the carrying out of an activity on their own account or on behalf of others for which they are registered in the corresponding Social Security or alternative Mutual Insurance Scheme, or the receipt of contributory or assistance benefits from the unemployment protection system, or pensions paid by the Social Security, Passive Classes or alternative Mutual Insurance Schemes, concur simultaneously.

5) Deduction for dependent ascendants.

They shall be entitled to receive a deduction of up to 1,200 euros per year, for each disabled ascendant entitled to the application of the minimums for ascendants and for the disability of that ascendant.

Taxpayers shall be entitled to receive the deduction in proportion to the number of months in which the situation of disability and the carrying out of an activity on their own account or on behalf of others for which they are registered in the corresponding Social Security or alternative Mutual Insurance Scheme, or the receipt of contributory or assistance benefits from the unemployment protection system, or pensions paid by the Social Security, Passive Classes or alternative Mutual Insurance Schemes, concur simultaneously.

The amounts shall be pro-rated according to the number of months in which the requirements are met.

6) Deduction for maternity.

Women with children under the age of three who are entitled to the minimum for descendants who are registered with the corresponding Social Security or mutual insurance scheme, can reduce the differential tax contribution by up to 1,200 They can also request advance payment of this deduction.

  • Deduction of childcare expenses and purchase of school materials (CCVV)

The above deduction can be increased by up to an additional 1000 euros when the taxpayer entitled to it has contributed amounts for the custody of the child under three years of age in approved day-care centers or nurseries.

(CCVV) For amounts used, during the tax period, for non-occasional custody in day-care centers and first cycle centers of infant education, of children under 3 years of age or permanent care of children under 3 years of age: 15 per cent of the amounts paid, with a limit of 270 euros for each child under 3 years of age registered in said day-care centers or infant education centers. In joint taxation, the maximum limit of the deduction will be 270 euros for each child.

(CCVV) 100 Euros for each child and for each child in permanent care who, on the date of accrual of the tax, is enrolled in Primary Education, Compulsory Secondary Education or special education units, in a public or private subsidized center. Requirements:

  1. That the children to which the deduction refers are entitled to the application of the corresponding minimum for descendants established in the state regulations.
  2. That the taxpayer is unemployed and registered as a jobseeker with a public employment service. Where the parents live together, this circumstance may be met by the other parent or adopter.

3.That the sum of the general taxable base and the taxable base of the savings does not exceed 25,000 euros in individual taxation or 40,000 euros in joint taxation.

When two taxpayers are entitled to the application of this deduction, its amount shall be apportioned equally between them.

8) Deduction for renting a permanent home (CCVV)

It will only entitle taxpayers with leases entered into before the 1st of January 2015 to take this deduction.

For this purpose, the taxpayer must have been entitled to the deduction for renting a permanent home in relation to the amounts paid for this concept in a tax period accrued prior to the 1st of January 2015..

9) First purchase of a regular home, taxpayer aged 35 or under. (CCVV)

A deduction of 5 per cent may be made from the amounts spent by the taxpayer during the tax period, including expenses, other than interest, incurred in the first purchase of his or her primary residence, provided that the following requirements are met

It must be the first acquisition (including the construction of the taxpayer’s habitual residence).

The age of the taxpayer must be equal to or less than 35 years on the date of accrual of the tax.

10) Deduction for investment in a newly created company.

A deduction of 30% of the amounts paid in the tax period (which cannot exceed 60,000 euros per year) is applied for the subscription of shares or holdings in newly created companies. The deduction is conditional upon compliance with certain requirements by both the investor and the company in which the investment is made.

11) Exemption for capital gains over 65 years of age

The capital gain obtained in the onerous or lucrative transfer of the habitual residence will be exempt, whether it is transferred in exchange for capital or in exchange for an income, temporary or for life.

The exemption also applies to the transfer of the naked property of the main residence by its owner over 65 years of age, who reserves the life usufruct of said residence.

12) Deduction for double taxation.

When the taxpayer’s income includes income or capital gains obtained and taxed abroad, the lesser of the following amounts shall be deducted

  1. The actual amount paid abroad for a tax of the same or similar nature as this tax or the non-resident income tax on such income or capital gains.
  2. The result of applying the average effective tax rate to the taxable income taxed abroad.

13) Exemption for capital gains from reinvestment in the habitual residence.

When the capital gain comes from the sale of the main residence and the amount obtained in the transfer is reinvested in full or in part in the acquisition of another main residence, the amount reinvested or to be reinvested must be reflected, provided that the conditions laid down in the regulations for exempting the gain from the sale from taxation are met.

– Total amount obtained from the sale of the main residence that can be reinvested.

– Capital gain obtained

– Amount reinvested. The reinvestment must be made, in one go or successively, over a period not exceeding two years.

The reinvestment must be made in one go or successively over a period not exceeding two years.

14) Deduction of mortgage expenses constituted before 2013.

From 1st of January 2013, only the following taxpayers will be entitled to apply the deduction for investment in a main residence for the amounts paid in the period in question:

– Taxpayers who have acquired their main residence or paid amounts for its construction before 1st of January 2013.

– Taxpayers who have paid amounts prior to 1st of January 2013 for renovation or extension work on their main residence, provided that such work is completed prior to 1st of January 2017.

– Taxpayers who have paid amounts for the execution of works and installations for the adaptation of the habitual residence of the disabled prior to 1st of January 2013, provided that the aforementioned works or installations are completed prior to 1st of January 2017.

In any case, in order to be able to apply the transitional deduction regime, it is required that the contributors have applied the deduction for said dwelling in 2012 or in previous years, unless they have not yet been able to apply it because the amount invested in the same has not exceeded the exempt amount for reinvestment or the effective deduction bases of previous dwellings.

15) Deduction for donations.

Donations made to certain non-profit organizations entitle the holder to a deduction of 75% of the amounts donated, when these do not exceed 150 euros, and 30% (or 35% in certain cases), for the rest of the amounts donated that exceed 150 euros. There are also other associations declared to be of public utility and legally recognized foundations that also give the right to a deduction, although in a smaller percentage (10%). The deduction for donations is limited to 10% of the tax base.

16) Deduction for political party affiliation.

Membership fees and contributions to Political Parties, Federations, Coalitions or Voters’ Groups entitle the holder to a 20% deduction on such fees, with a maximum limit of 600 euros per year.

17) Deduction for contributions to pension plans.

  • Contributions to the following social welfare systems may reduce the general taxable base:
  • Pension plans
  • Mutual Benefit Societies
  • Insured Pension Plans
  • Business social welfare plans
  • Premiums paid to private insurers exclusively covering the risk of severe or major dependency.

The total of the maximum annual contributions made to the social welfare systems, including, if applicable, those which have been charged by the promoters, which may give right to reduce the general taxable base may not exceed 8,000 euros.

18) For obtaining income derived from the rental of housing whose income does not exceed the reference price of private rentals. (CCVV)

5 per cent of the total income in the tax period. In order to determine the amount of the deduction, among the total income, the expenses and taxes, other than supplies, that correspond to the lessor as owner of the property must be taken into consideration, such as the Property Tax and the community of owners’ fees, and which, according to the conditions of the rental contract, are passed on to the lessee. The maximum annual base for this deduction is set at 3,000 euros for both individual and joint taxation.

19) Deduction of conservation and improvement works of the habitual residence (CCVV).

Taxpayers may deduct:

20 percent of the amounts paid in 2019 for work carried out from the 1st of January 2017.

25 percent of the amounts paid in 2015

10 per cent of the amounts paid in 2014

for works carried out in each of these periods in the habitual residence in which they are the owners or holders of a real right of use or enjoyment, or in the building in which it is located, provided that their purpose is to preserve it, or to improve the quality, sustainability and accessibility, in the terms provided for in the Autonomous Community regulations on refurbishment, design and quality in housing.

Will not give right to the deduction

  • The works carried out in parking lots, gardens, parks, swimming pools and sports facilities and other similar elements.
  • The amounts applied to the deduction for investments for the use of renewable energy sources in the habitual residence.

The part of the investment financed with public subsidies.

20)Deduction for acquisition of habitual residence by persons with disabilities.

Taxpayers who are physically or sensorially disabled, with a degree of disability equal to or greater than 65 percent, or mentally disabled, with a degree of disability equal to or greater than 33 percent, may deduct 5 percent of the amounts destined during the tax period for the acquisition of the dwelling that constitutes or will constitute their habitual residence, (including the construction or extension of the habitual residence of the disabled person), with the exception of interest.

21) Exemption for annuity insurance

Capital gains disclosed on the transfer of assets by taxpayers over 65 years of age are exempt from tax, provided that the total amount obtained from the transfer is used to constitute an insured life annuity in their favour.

The annuity must be constituted within six months from the date of transfer of the asset.

The maximum total amount whose reinvestment in the constitution of life annuities will give right to apply the exemption will be 240,000 euros.

Where the amount reinvested is less than the total amount received in the transfer, only the proportional part of the capital gain obtained corresponding to the amount reinvested will be excluded from taxation.

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