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Source: Arrabe Asesores S.A. 16 May 2011

Royal Decree-Law 5 / 2011 of April 29, Development of housing rehabilitation (BOE 06/05/2011)

Is used to include the new income tax deduction for housing rehabilitation, including not only the residence, but also as second homes.

Income tax deduction for works of improvement in housing

1. Extending the deduction for improvement works to all dwellings, including those that are for rent, with the exception that they are not affected by the economic activities of the taxpayer.

2. Provides that taxpayers with taxable income exceeding EUR 53,007.20 as a whole will benefit from the deduction, reducing it gradually to get to zero for taxpayers with a tax base exceeding 71,007.20 euros.

3. The deduction rate from 10% to 20% from 07/05/2011 until 31/12/2012. This deduction does not apply to works carried out in housing affects economic activity, parking lots, gardens, parks, swimming pools and sports facilities and other components.

4. It raises the maximum annual deduction, which rose from 4,000 euros to 6,750 euros, increasing the maximum allowable multi-year limit, reduced from 12,000 euros to 20,000 euros. In any case, the aggregate basis of the deduction for the tax periods in which it is applied exceed € 20,000 per household (before 12,000). Where there are multiple owners entitled to the deduction for the same home, that ceiling of 20,000 euros will be distributed among the investors according to their respective percentage ownership in the property.

5. The new regulation of the deduction shall be applicable to the works carried out since the entry into force of Royal Decree-law until December 31, 2012.


The day following its publication in the Official Gazette, except the measures provided for in Chapter II (Measures to combat irregular occupation once the voluntary process of regularization), which will come into force on August 1, 2011.

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