Now that we are in the middle of the 2017 Renta campaign, many mortgaged people are wondering how much money they can save if they apply the deduction for investment in a home on what was paid last year to pay off the mortgage. In this article, we will explain in detail in which cases this relief can be practiced, as well as what are the limits set by the Treasury.
Up to 15% of the amortization of the mortgage loan, but with limits
Before explaining all the details about the deduction for investment in habitual residence, it should be noted that not everyone can deduct the mortgage. This tax benefit was abolished in 2013, so it can only be applied by those who bought their home before January 1, 2013, and practiced the deduction on what was paid for the mortgage prior to that date.
That said, the deduction for investment in a home allows us to deduct up to 15% of the amount paid during the year to amortize our mortgage. Yes, that percentage can be applied to a maximum limit of 9,040 euros, which amounts to 18,080 euros if we share the ownership of the mortgage loan with our partner and we decided to make a separate statement.
Thus, if throughout the year we have paid a total of 20,000 euros in amortization of the mortgage loan, we can save a maximum of 1,356 euros in IRPF, which is 15% of the maximum of 9,040 euros. If we make the declaration separately from our partner, we can double the reduction, which will reach 2,712 euros.
What happens if I changed my bank mortgage from 2013?
Another point to keep in mind about this deduction is that it can also be applied if a mortgage subrogation or a cancellation was carried out to change banks. The Tax Agency itself ensures that these operations are aimed at modifying the conditions of the mortgage loan that was used to acquire the home before 2013 so that the taxpayer who practices them does not lose his right to benefit from the tax relief.
It can also be applied to amortize the mortgage in advance
In addition, if during 2017 we have advanced all or a part of the capital of our mortgage loan, we can also benefit from this deduction, since it applies to everything paid for the mortgage per year, including early repayments. Of course, the reduction, in this case, will also be limited to the 9,040 or 18,080 euros mentioned.
For this reason, before amortizing a mortgage in advance (either totally or partially), it is advisable to assess whether it exceeds the limit of 9,040 euros per annum. In the current scenario of low rates, the savings we can obtain with this operation will not be very high, so it may be more profitable to invest that money in a short-term depositor in a similar product that gives us a higher return than that we would save on interest.
One of the best one-year deposits that we can find within the market is the Bulgarian American Credit Bank (BACB), where we can invest through the Raisin platform, which offers a profitability of 1.15% APR, requires a minimum of 5,000 euros and is backed by the Bulgarian Deposit Guarantee Fund, and when we open it we will receive a welcome gift of 50 euros.