2023-11-28 00:57:48
The final stretch of the year may be a good time to make certain investments or operations that will alleviate the 2023 personal income tax bill, which will be settled in the spring of 2024.
The experts from Aedaf and the General Council of Economists offer some options:
1. Buy an electric car. The big news for the 2023 financial year is a new 15% deduction, up to a maximum base of 20,000 euros, for the purchase of a new plug-in electric vehicle not used for economic activities and another of the same amount, with a maximum base of 4,000 euros, for the installation of battery charging systems, provided that the investment has been made after June 30.
2. Contribute to the pension plan. Contributions to pension plans enjoy a 30% reduction up to a maximum base of 1,500 euros, although this limit increases by 8,500 euros if this instrument receives business contributions.
3. Improve the energy efficiency of the home. Taxpayers who carry out actions to improve the energy efficiency of their primary or rental home can deduct 20% or 40% of the investment as long as it reduces the demand for heating and cooling by at least 7%. In the event that the works affect an entire residential building, the reduction is 60%.
4. Amortize mortgage. Those who bought their primary home before 2013 can still enjoy the 15% deduction on the amounts invested in the mortgage, up to a maximum base of 9,040 euros.
5. Donate to non-profit entities. Donations to non-profit entities allow a deduction of 80% of the first 150 euros contributed and 35% of the rest, a percentage that rises to 40% if at least the same amount was donated in the last two years.
6. Invest in new companies. Investments in new or recently created companies enjoy a 30% deduction, up to a maximum base of 60,000 euros. In the case of emerging companies, the deduction is 50% with a maximum base of 100,000 euros.
7. Request restaurant checks, transportation checks or medical insurance from the company. Monetary remuneration in kind is not taxable in personal income tax.
8. Invest in savings plans. Profits obtained from investing in long-term savings plans are exempt as long as the annual contribution does not exceed 5,000 euros and is maintained for at least 5 years from the first contribution.
9. Rent a home. If you have a home that you want to rent regularly, it is recommended to formalize the contract before December 31 to enjoy a 60% reduction, since it will drop to 50% from January 1, 2024. However, if the housing is in a stressed market or has been rehabilitated can access greater reductions for contracts signed from 2024 onwards.
10. Offset gains with losses. Taxpayers who have obtained capital gains in 2023 can reduce their tax bill if they close operations at a loss, for example stock sales, that offset them.
11. Reinvest the profits from selling the primary home. The profits obtained from the sale of the primary residence are not taxed if they are reinvested in another primary residence within a period of two years.
12. Make repairs to rental homes. If you have a permanent rental home, the repair and conservation expenses are deductible in the following four years, so the end of the year may be a good time to make these investments and enjoy their tax advantages as early as 2024.
13. Rescue the pension plan. Taxpayers who retired in 2021 have until the end of the year to redeem their pension plan with a 40% tax reduction for contributions made before 2007 and as long as it is done in the form of capital.
14. Establish a life annuity. Those over 65 years of age are exempt from paying capital gains tax as long as they constitute a life annuity, up to a maximum of 240,000 euros. The capital gain derived from the sale of the habitual residence is also not taxed.
In addition to the advice for tax planning in the final stretch of the year, experts launch two general recommendations for the presentation of the income tax return in spring 2024:
Don’t forget deductions and exemptions.
Other deductions can be applied in the declaration, such as those for maternity, large family, for contributions to political parties, for geographical mobility or for living on the island of La Palma. Likewise, there are exemptions for severance pay up to 180,000 euros or for the delivery of shares and participations in the company for up to 12,000 euros (50,000 euros if it is emerging).
Nor declare all income.
They also remember that all income obtained in 2023 must be declared, including profits from trading with cryptocurrencies or public aid received personally or by the community of owners (for example, to install an elevator).
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