Are personal loans deductible ? The question is indeed rather complex and deserves to be thoroughly investigated. There is in fact no single answer to this question, and we can preliminarily say that personal loans are deductible only in some cases : by definition, since these loans are not finalized, for example, for consumer credit, but granted precisely for purely individual needs, for the tax authorities should not provide the right to discounts of any kind.
However, there is only one case where it is possible to take advantage of tax incentives, ie to deduct interest on loans, and it is when these loans have to do with work, and therefore it is essential that the loans are related to purchase of an asset aimed at carrying out its professional activity.
- Tax deduction, which means?
- Personal deductible loans, who is entitled to a refund?
- Restructuring and energy redevelopment
- Loans and agricultural loans
Tax deduction, which means?
What does it mean when referring to a tax deduction ? It is about
a tax advantage that acts on the tax , and differs from the tax deduction, which is instead an advantage that acts on taxable income. These facilitations are established by the Fiscal itself through specific thresholds
For certain expenses, such as health or building renovation, the Fisco recognizes a deduction equal to a certain percentage (for example, 19, 36 or 55 percent of the charge incurred). With the deduction we obtain a tax saving equal to the deductible percentage of the expenditure made.
Personal deductible loans, who is entitled to a refund?
In general, a private individual is not entitled to the reimbursement of interest on personal loans through tax deductions, not even partially: the question is positively posed for certain categories of subjects, such as self-employed professionals and self-employed workers , but the same applies to individual companies. Therefore the deduction of the interest payable is admissible for loans that have been stipulated for a specific purpose, that is to corroborate the performance of the work activity.
In the event that a high sum is requested through funding, to be allocated only partially to the professional activity, experts in the sector suggest splitting the personal loan into two sections, in order to have a part of the amount paid for the work needs. , and thus be able to enjoy tax benefits in the form of deductions, separated from the sum intended exclusively to meet their personal needs, or otherwise non-business, which is not subject to any form of tax relief.
Restructuring and energy redevelopment
There are also special cases of deductible loans , and this is the case, for example, of loans for home renovation and energy redevelopment of the same, enjoying the benefits provided by the state.
The restructuring deduction is equal to 50 percent of the expenses incurred from June 26, 2012 to December 31, 2017, within a spending limit of 96 thousand euros per property, while starting from January 1, 2018 the deduction drops to 36 percent for a figure maximum of 48 thousand euros. The deduction is divided into 10 annual installments of the same amount.
The deduction must be indicated at the time of the declaration of income in part E, section III A and III B in lines from E41 to E53 .
The case of energy redevelopment is different, where different forms of tax deduction are envisaged:
- Deduction of 65 percent up to the end of 2017 for energy redevelopment of existing buildings. The maximum deductible expense varies according to the type of intervention carried out and the deduction is divided into 10 annual installments of the same amount.
- 70% deduction from 2017 until the end of 2021 for condominium interventions affecting the external façade of the building with an incidence of more than 25% of the gross dispersing surface of the building itself. Maximum expense limit of 40 thousand euros per unit.
- 75% deduction if the intervention is aimed at improving the summer and winter energy performance of the condominium, achieving at least the average quality set by the ministerial decree of 26 June 2015. Maximum expenditure limit of 40 thousand euro per unit.
- Deduction of 36 percent from January 1, 2018 for interventions on individual housing units for a maximum expenditure of 48 thousand euros.
- Deduction of 36 percent from January 1, 2022 for interventions on entire condominiums for a maximum expenditure of 48 thousand euros.
The deduction must be indicated in picture E, section IV Righi E61 / E62 .
Loans and agricultural loans
Another special case to analyze about the tax deductions on interest concerns loans and agricultural loans , whose sums paid can be deducted for a sum equal to or lower than the sum of the agricultural income and the declared dominican income. This sum must also include the portion of Dominican and agricultural income, if any, corresponding to the shareholding in companies of persons engaged in the aforesaid agricultural activity.
Recall that the tax deduction for agricultural loans and mortgages that admit it not only affects the interest, but also extends to the revaluation quotas that derive from indexation clauses and ancillary charges, such as, cadastral taxes, notary fees and those of real estate brokerage.