Guide to saving on income from 2021: what we can do until the end of the year
There is still approximately half a year left for the 2021 income tax return. However, the time to think about how much each person will have to pay is now. This month of December is a key month for the taxpayer who wants -and can- to save a few euros on their tax bill.
The Register of Tax Advisory Economists (REAF) of the General Council of Economists (CGE) have prepared their traditional guide on what can be done between now and the end of the year to try to save for income. Also the finance technicians, Gestha, have already transferred their recommendations; they, in fact, calculate that taking certain decisions before December 31 an average of 2,893 could be saved
euros in the declaration, an amount that varies depending on the returns obtained.
Take advantage of the pension plan
Until 2020, the maximum limit that was allowed to deduct from contributions to pension plans was 8,000 euros or 30% of the sum of income from work and economic activities. In 2021 it has been reduced to 2,000 euros, but it is still attractive to exhaust that tax benefit and reach that maximum to reduce the payment of taxes. Luis del Amo, secretary general of the REAF, adds that “the higher the income, the more you benefit from this because it is a reduction in the tax base.”
Likewise, as Paula Satrústegui, Abante’s Asset Counseling partner, recalls, it is advisable to exhaust this limit this year since that benefit will continue to be reduced in 2022; specifically, up to 1,500 euros, as stated in the draft General State Budgets for 2022. Likewise, as published by ABC, in the mind of the Government is to bring this tax incentive to zero in the short-medium term.
Efficiency works and rent reduction
Del Amo emphasizes that there have hardly been any tax developments this year and that they can be used between now and the end of the year. In his case, he cites two very specific ones. “One of them is the deduction for works that improve the energy efficiency of the property or a house that is rented,” he says. In this case, there is the possibility of applying a deduction of 20% to 60%, with a maximum base of between 5,000 and 15,000 euros, depending on the case. This can be applied from October 6, but not everyone will be able to benefit since it is required to pass certain procedures such as quantifying the improvement in energy efficiency, examining the home … The second novelty to which it refers is that the landlords of premises who are not large holders and who have rented their property for tourism, commerce and hospitality activities may compute as an extra deductible expense of the real estate capital the amount of the reduction in the rental rent to which they arrived with the tenant because of the Covid in the first quarter of this year, if there was one.
Deduction for habitual residence
One of the most popular tax benefits every year is in the deduction for primary residence. Satrústegui recalls that there is a tax benefit for investment in a habitual residence for those who are paying a mortgage, as long as the purchase was made before 2013. «We will have a deduction of up to 9,040 euros. An example: if I have paid 6,000 euros of mortgage this year, I could contribute another 3,040 euros to benefit myself and be able to deduct 15% of 9,040 euros. In this sense, as they recall in the REAF, a nuance to take into account: «If you have the right to deduct for what until now is your usual home and you want to put it up for rent, as of the year it is rented it will no longer be your habitual residence and you will no longer be able to deduct any amount ».
Donations have a prize
Making donations to non-profit organizations, NGOs, may also reduce your tax bill. “If you are thinking of making a donation, you should know that in 2021 80% of the first 150 euros donated can be deducted. The rest of the donations that exceed 150 euros give the right to deduct 35% of the donated amount», As the REAF document points out.
Knowing how to use the savings base
In 2020, a new tranche was included in the tax base of savings, the so-called ‘cheap part’ of Income, when the Government announced a new rate of 26%. But the possible savings are not there, but in properly planning each element that is part of this base.
Satrústegui remembers that there is the possibility of compensating some games with others. «When we have a performance of a financial product, it is taxed in the savings part, except for the rescue of pension plans for example. Everything is taxed to the same type but not everything can be compensated with everything. We have two parts, movable capital and capital gains and losses. When you make the declaration you can unlimitedly offset the transferable income among themselves and the gains with the capital losses. If afterwards there is still a negative sign, one part could be offset against the other with a maximum of 25%».
In this sense, each one must analyze what balance is left in their savings tax base, and in each part of it, since it can be beneficial, as Gestha points out, to sell a financial product to compensate for any loss.
Over 65 years
Gestha, the finance technicians, adds an element to take into account for older citizens. «The profits obtained by the sale of the habitual residence by the taxpayers are exempt over 65 years old and also by severely dependent people or large dependents “, affirms the group.
On January 1, the new reference value for real estate will come into effect. It does not apply to Income, but to the tax base of the Tax on Patrimonial Transmissions and Inheritance and Donations. Depending on the value of the same for each property, a tax increase in these taxes could occur.
For this reason, as the tax advisers pointed out a few weeks ago in the REAF, there are those who are carrying out operations so as not to be affected by it and end up paying more than before.