In an effort to boost the economy and employment in the construction sector, the Spanish government has decided to extend to second homes tax deductions originally available for expenses incurred in the renovation of the primary personal residence. The tax deduction will apply even where the property is being rented out to third parties.
The tax deduction was originally introduced in April 2010, and initially had a 10% rate applicable to a maximum investment per taxpayer of €4,000 each year for a period of three years. The rate applied to those with gross earnings up to €33,000, with a progressive reduction of the rate until it would disappear for those earning over €53,000.
As a result of the changes introduced by the government the full benefit of the deduction can be taken advantage of by anyone earning up to the old maximum limit of €53,000. The benefit then reduces proportionally up to a limit of €71,000, the new maximum.Moreover the deductions available are increased from 10% to 20% and are applicable to an increased base of €6,750. This increases the maximum deductible amount from €400 (€4,000 @ 10%) to €1,350 (€6,750 @ 20%). Accordingly, the maximum €12,000 investment per taxpayer has been increased to €20,000.
The deductions are limited to those that are carried out before the end of 2012 and must involve improvements to the habitability of the home which therefore excludes renovations to outdoor installations such as the garage or a swimming pool.
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