What is Personal Income Tax and how can it affect me if I ask for a loan

You may have asked yourself at some time if the IRPF is related to a loan. Can it affect me in any way? From Lenders we are going to explain to you the way in which they pay the loans so that you do not have doubts about it. Would you like to know more? In that case, keep reading.

Do the loans tax? Do I have to indicate them in a box on the income statement? Is there any way to deduct the interest charged to me? These are undoubtedly the questions we must answer. Let’s go by parts.

Is it possible to deduct the interests of the loans in the declaration of income?

In most cases unfortunately it is not. It must be taken into account that when a loan is requested it is not considered as if it were an income in the income statement. Although suddenly we have more money. These are not considered as an increase of our capital. Therefore, it is not necessary to declare them.

However, there are certain cases in which we could deduct them. Let’s see what they are

When can we deduct a loan

When we ask for a loan for our habitual home

In this case, as long as you have purchased the home before January 1, 2013 you can deduct the loans you have requested to buy it. For example, if you have a mortgage prior to this date you are in luck. However, this deduction does not apply to the credits that are requested for specific and low-amount expenses. That is, if you ask for a micro credit to pay a month for the mortgage you will not have to declare it.

In case of real estate capital yields

The thing however is different if the loan is requested to perform better in our home. For example, if you decide to apply for a loan in Lenders to fix a problem in the bathroom or change the windows, you can deduct the interest on the loan in your income tax return.

Eye with family loans

These are undoubtedly the ones that generate the most doubts among individuals. And to know if we have to declare them, we must distinguish clearly between:

  • We will talk about donations when a person decides to offer completely free and without return something in favor of another. For example, if your parents decide to donate money so you can become independent. It is not a loan because you will not return it and they offer it freely. These types of procedures are regulated in the Civil Code. Specifically in Article 618. In this case you would have to face the Inheritance and Donations Tax.
  • Loans However, if a relative offers you an amount to help you with an economic downturn, but you have to pay it back, we would be talking about a loan. In this case, the loan would be exempt from Property Transfer Tax and Documented Legal Acts. To avoid potential problems, it is best to write a contract specifying both the amount and the return period and interest. Although these are 0%. This agreement must be legalized in the Tax Agency so that it is not confused with a donation.


    Elena Baker