In view of the imminent closure of the 2023 tax year, this presentation is intended to remind taxpayers of a series of measures that they can implement to reduce their Personal Income Tax (IRPF) settlement. These actions, based on the regulations in force and with a technical approach, cover various tax areas, each with its own particularities and potential benefits.
- Leasing of real estate intended for the habitual residence: In the scenario of leases of immovable property intended for habitual residence, it should be noted that the positive net yield will be reduced by 50%, in general, for contracts entered into as from 1 January 2024. There are also higher percentages of reduction in specific cases, such as stressed areas with initial rent reductions or young tenants. Landlords with contracts in force prior to this date will be able to maintain the current reduction of 60%.
- Deduction for investment in newly created companies: The deduction for investment in newly created companies, effective from 1 January 2023, allows taxpayers to deduct 50% of the amounts paid for the subscription of shares or participations in such companies, provided that specific requirements and conditions are met. In addition, the maximum deduction base is set at €100,000 per year, the deadline for the subscription of shares or participations is extended, and additional benefits are granted to founding partners of start-up companies.
- Early repayment of mortgages: The early repayment of mortgages or loans intended for the purchase of the principal residence is deductible, with certain limitations, for those taxpayers who are entitled to the deduction for investment in the principal residence.
- Exclusion of capital gains for the over 65s: Taxpayers over 65 years of age have the possibility of excluding from taxation capital gains derived from the transfer of capital items, provided that the amount obtained is used within a period of six months to constitute an assured life annuity in their favour, with a maximum limit of €240,000.
- New deductions for electric vehicles and charging points: Deductions have been introduced for the purchase of electric vehicles and the installation of charging points. Taxpayers can deduct 15% of the purchase value of a new electric vehicle, with a maximum base of €20,000, and 15% of the amounts paid for the installation of charging points, with a maximum base of €4,000 per year.
- Deductions for energy efficiency improvement works: In the area of energy efficiency improvement works in dwellings, specific deductions are established for taxpayers owning dwellings in residential buildings, as well as for works carried out until 31 December 2023, related to the reduction of heating and cooling demand.
- Contributions to social welfare instruments: Contributions to pension plans, company social welfare plans and private insurance covering specific risks directly reduce the tax base, with maximum joint deductible limits depending on the net income from work and economic activities received.
- Contributions to social welfare systems of the spouse: The possibility of reducing the tax base by means of contributions to the spouse’s social welfare systems is contemplated, provided that the spouse does not obtain net income from work or economic activities, or obtains less than €8,000 per year.
- Deductions for donations and contributions to non-profit organisations: The law provides for deductions for donations and other contributions to non-profit organisations, including NGOs, foundations and associations declared to be of public utility.
In case of any doubts or concerns, interested parties are invited to contact our firm, where we will be pleased to offer the necessary advice on tax matters.