The municipalities propose that an income of 85,000 euros may not be deducted from housing construction

The provincial councils of Álava, Bizkaia and Gipuzkoa will propose to abolish the deduction for the purchase or rental of housing when the taxpayer’s income exceeds 85,000 euros.

This is one of the main novelties presented this Monday by the three provincial deputies of the Treasury of Álava, Bizkaia and Gipuzkoa, Itziar Gonzalo, Itxaso Berrojalbiz and Itziar Agirreduring their appearances at the General Assemblies of the three areas where they present the general lines of the tax reform proposal agreed upon by PNV and PSE-EE.

Until now, the home deduction has been universal in nature and all taxpayers can benefit from the deduction, without an income limit.

For example, the deputies of the Ministry of Finance and Treasury have appeared at the General Assemblies of their respective territories to report on the status of the budget review in view of housing matters. According to these institutions, it is “a harmonized proposal aimed at responding to common challenges of the three areas.”

Moreover, this evaluation aims, on the one hand, to “continue the redistributive character of the tax system and therefore the progressivity of the system”, and on the other hand “the commitment to innovation and competitiveness of the economic and social fabric of Euskadi with new challenges on the table: from demographic to green taxes, to gender equality, the protection of lower income taxpayers, youth, reconciliation, housing, employment or pensions”.

In their respective interventions, the three regional officials explained that, in order to continue to promote social cohesion and strengthen the progressiveness feature of the tax system, the personal income tax reporting obligation is increased to 19,000 euros per year (higher than the Interprofessional Minimum Wage, which amounts to 15,876 euros in 2024).

In the field of housing, institutions try to promote this rent increase strengthening tax incentives to increase the supply of affordable rental housing.

To this end, the tax treatment of the landlord is improved in the event that the home is intended as the tenant’s habitual residence, although it is established that this will be higher when public mediation in the rental, or in which the home is located stressed areas.

In the case of tenants The applicable deduction percentage will be increased for certain groups. In the case of young people this rises to 35%.

An attempt is made to give preference to the emancipation of youth facilitating access to the acquisition of a regular home, with the extension of the term of the housing account from six to ten years, which also abolishes the maximum investment limit of 8,500 euros for the purchase of a home during the first year. The deduction for rent and the acquisition of habitual residence is also increased for the young group, whose threshold is increased until they turn 36. In addition, the application of deductions accrued and not applied in the following five years is permitted.

In the same way, and with the aim of renewing the aging real estate stock, the owner of a home will be allowed to apply the deduction for protected home renovation (e.g. accessibility works) as long as it is used for renting a habitual residence.