Did you know that in addition to offering great security for you and your family, life insurance also has other advantages such as tax benefits? And it is that depending on whether you are an individual, self-employed, or entrepreneur, and the type of Life Insurance you contract, you will be able to deduct a part of your expense in your statements.
Can I deduct life insurance on my Income Tax return if I am an individual?
Now that we are in the middle of the Income Tax campaign, you may be wondering if, as an individual, you can include your life insurance fee in your statement. The answer to the question “ Is life insurance tax-deductible in the Income Statement? ” will depend on the type of life insurance you have contracted.
If it is a Life Insurance linked to the mortgage, such as our Full Life Insurance (Mortgage Life Insurance) you can do it since the law allows you to deduct up to 15% of the total amount destined for the purchase of a house, including insurance up to a maximum of 9,040 euros per year. But for this, you must meet two requirements: that it be your habitual residence and that the purchase of the house has been made before January 1, 2013.
In this case, you must bear in mind that the reduction that will be applied to you will depend on what is established by each Autonomous Community since of that 15% that you can deduct, 7.5% is a state section and another 7.5% depends on what is established by each Community with two exceptions: the Basque Country and Navarra, where the Autonomous Community manages all the deductions of the Income.
In this way, in the Basque Country, the law allows you to deduct up to 18% of the total amount allocated to the purchase of a house (regardless of the year of purchase) while in Navarra you can deduct up to 15% if the purchase has been made before 2018.
If what you have contracted is Life Insurance not linked to a loan, you will not be able to deduct it on your income schedule 1 tax return.
Tax advantages of life insurance for the self-employed and entrepreneurs
If you are self-employed or an entrepreneur, the type of life insurance you have contracted does not matter, since you will be able to deduct its expense in your income statement or personal income tax in all cases, as is the case with other insurance such as health.
The only thing you have to keep in mind is that there is a maximum reduction since the law indicates that you cannot deduct more than €500.
In this way, if you have taken out Life Insurance that is not linked to the mortgage, such as Full Life Insurance (Family Life Insurance), you can deduct the costs of the premium up to a maximum of €500.
And if it is a Life Insurance linked to the mortgage, you can include it in your income statement without having to meet the requirements that we have mentioned before, that is, you can do it even when it is not your habitual residence or when the purchase of the house was made after 2013.
How to deduct your life insurance fee on your income statement?
If you have verified that you meet the requirements to deduct your mortgage-linked life insurance on your income tax return, you must add the payment of the premiums to the installments you have paid on your mortgage during the year and include it as the total amount allocated. to the purchase of a house. This amount can never exceed the established maximum, which is €9,040.