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Practical guide to 2021 Income Tax.

For investments in electrical energy self-consumption facilities or for the use of certain renewable energy sources in the homes of the Valencian Community, as well as for the share of investment in collective facilities where the homes are located

Regulations: Art. 4.Uno.o) Act 13/1997, of 23 December, regulating the autonomous range of Personal Income Tax and other taxes transferred, from the Valencian Community.

Amount of the deduction

Note: This deduction was applied in 2017 and 2018 exclusively to investments made in the taxpayer's main residence.  From 2019 it spread to all types of housing. And since 1 January 2021 different percentages have been established for primary residence or other type of residence.

  • 40% Of the amount of the amounts invested in facilities made in the main residence of the Valencian Community and in collective facilities of the building for any of the purposes indicated below: 100

    • Electrical self-supply facilities, as established in article 9.1.a of Law 24/2013 of 16 December, on the Electricity Sector, and the regulations that it develops (fashion of electricity supply with self-consumption).

    • Thermal energy production facilities from solar, biomass or geothermal energy to generate hot water, heating and/or air-conditioning.

    • Electrical power production facilities using photovoltaic or wind power, for electrification of detached homes in the distribution grid and whose connection to the power supply is unfeasible from a technical, environmental or economic point of view.

  • 20% Of the amount of the amounts invested in facilities, for any of the purposes indicated above, 100 made in homes that are second residences for the taxpayer, provided that they are not related to the exercise of an economic activity.

    Note:To determine whether the property is affected by economic activities, it will be subject to the state regulations governing personal income tax.

    Note: The notes that characterise the exercise of an economic activity and the resulting returns are discussed in chapter 6.

  • The right to apply this deduction shall not be granted to installations that are mandatory under the application of Royal Decree 314/2006 of 17 March, which approves the Technical Building Code (CTE).

Requirements for applying the deduction

  • The residences must be located in the territory of the Valencian Community.

    Note: For the purposes of this deduction, the concept of a home contained in the autonomous regulations governing the property will be applied.

  • In the case of sets of homes under a horizontal property regime in which these facilities are carried out in a shared manner, whenever they have legal coverage, this deduction may be applied by each of the owners individually according to the corresponding coefficient of participation, provided that they meet the other established requirements.

  • The deduction requires the prior recognition of the regional government.For this purpose, the Valencian Institute of Business Competitiveness (Ivace) will issue the corresponding supporting certification.

    The Ivace will determine the type, technical requirements, maximum reference costs and other characteristics of the equipment and facilities to which the deduction established in this section applies. The Ivace may carry out the control and technical verification actions on the installed equipment it deems appropriate.

  • The actions subject to deduction must be carried out by installation companies that meet the requirements established by regulations.

Deduction base

  • The basis for this deduction is constituted by the amounts actually paid by the taxpayer in the financial year.

    In the case of a property owned by the joint property company, the expenses of the family home are attributable to both spouses, regardless of who pays them effectively or from which of them appears as the owner of the invoice. In the scheme for separating assets, the expense must be allocated to one or another spouse or both of them, depending on who has actually made the expense.

    In the case of payments from financing obtained from a bank or financial institution, the capital amortisation of each financial year, with the exception of interest, will be considered as part of the deduction base.

    Financing expenses, other than interest, are only part of the base when they have been included in the capital to be financed.

    Note: To apply the deduction, the supporting documents for expenditure and payment must be kept, which must comply with the provisions of their applicable regulations.

  • The application of the deduction is conditional on the delivery of the monetary amounts derived from the legal act or business that gives entitlement to its application made by credit or debit card, bank transfer, nominative cheque or deposit in accounts with credit institutions.

    The requirement of this requirement is established in the Additional Provision of Act 13/1997, of 23 December, which regulates the autonomous range of Personal Income Tax and other taxes transferred.

Annual maximum base

  • The maximum annual basis for this deduction is 8,000 euros. The stated base will also be considered as a maximum deductible investment limit for each property and financial year. The part of the investment supported, if applicable, with public grants will not give entitlement to deduction.

    The limit of 8,000 euros per home and year is applied to all taxpayers with respect to the same home.

    In the case of several taxpayers and with respect to the same property, the limit of 8,000 euros is distributed according to the percentage of ownership of the real right held over the property of taxpayers, whether or not they are taxpayers for the tax.

  • Amounts corresponding to the tax period not deducted may be applied in the settlements of the tax periods ending in the four immediate and subsequent years.

Rules of application:

  • Amounts paid in a year that are pending deduction must be deducted in the maximum amount allowed for each of the following years and cannot be applied outside the term of four years.

  • When amounts invested in years prior to 2021 and not deducted are outstanding, the percentage applicable in 2021 will be that corresponding to the year in which the investments were made.

    Therefore, if amounts are invested in a main home in 2021 and there are amounts pending deduction from previous years, the applicable percentage will be 20% compared to the amounts pending deduction and 100% of the amounts invested in 40. 100 2021

  • If in a financial year there are quantities paid in the year and others from previous years pending deduction, these will be applied first for the purposes of determining the amounts paid in the year that can be deducted in the following financial years

  • The deduction corresponding to the amounts paid in a financial year in which the taxpayer has not filed a tax return, as well as the deduction not applied for reasons other than the application of the maximum deduction base, cannot be applied in subsequent years.

  • The deduction corresponding to the amounts invested in a financial year in which the taxpayer has not filed a tax return, as well as the deduction "not "for reasons other than applying the maximum deduction base (for example, because the deduction does not have effect on the final result of the tax return), only takes effect in that financial year, without it being possible to transfer it to subsequent years.

  • In exceptional cases where the deduction is applied for more than one property, if the total investment made in the year exceeds the maximum deduction base, the deduction corresponding to each of the homes, is first made in light of the circumstances specific to each property and, secondly, the proportion with respect to the deductible investment, both in the year of the investment and in the case of the application to the four immediate and successive tax periods.

Other conditions for applying the deduction

  • The application of this deduction will require that the verified amount of the taxpayer's assets at the end of the tax period exceeds the value that would be verified at the beginning of the tax period in at least the amount of the investments made.

    For these purposes, increases or decreases in value experienced during the aforementioned tax period will not be counted for the capital elements that, at the end of the tax period, continue to form part of the taxpayer's assets.

    See chapter 16 for checking the equity situation.