If you are thinking of doing a comprehensive renovation in your home, it is the perfect time to do so if you want to apply the deduction for renovation of a primary residence that the government has put in place. Last June, Law 10/2022, of 14 June, on urgent measures to promote building rehabilitation activity came into force in the context of this so-called ‘Recovery, Transformation and Resilience Plan‘. This measure is the result of the processing as a draft law of Royal Decree-Law 19/2021, of 5 October, which enables tax deductions and ways to facilitate access to financing, among other things. It sets out the three reasons that justify the urgent and necessary adoption of the measures. “The serious deterioration of the building stock in general and housing in particular, the need for our country to respond quickly to the challenges in terms of rehabilitation and the opportunity to allocate a significant volume of resources from European funds in the short term,” says the executive.
Knowing this, it seems clear that it is a great time to go from dreaming of the comprehensive renovation of your home, to making it a reality.
Thus, certain tax incentives are contemplated, such as a significant improvement in the treatment of rehabilitation aid, since they will not be integrated into the personal income tax base when they have been granted through different aid programs. These include the programmes of the aforementioned Royal Decree 853/2021, of 5 October, which eliminates any type of tax impact for the recipient of the aid. These personal income tax deductions that taxpayers who carry out renovation work on their home can opt for are divided into three types.
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Up to 20% deduction for renovation in primary residence
A 20% deduction may be obtained for renovation in a primary residence for actions that reduce the demand for heating and cooling by 7%. Its application period is from the entry into force of the RDL on 6 October 2021 until 31 December 2022, and it must be the taxpayer’s main residence, or that it is intended or will be used for rent as a main residence. Individuals who carry out rehabilitation and improvement actions in which a reduction of at least 7% in the demand for heating and cooling is obtained, according to the energy efficiency certificate of the home, will be eligible. The deduction percentage is 20% of the amounts paid for the works carried out in the application period, up to a maximum of 5,000 euros per home. (maximum deduction base).
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Up to 40% deduction for renovation in primary residence
A 40% deduction may be obtained for renovation in a primary residence for actions that reduce the consumption of non-renewable primary energy by 30%, or improve the energy rating by reaching the letters “A” or “B” in the main residence. Its application period is from the entry into force of the RDL on 6 October 2021 until 31 December 2022, and it must be the taxpayer’s main residence, or that it is intended or will be used for rent as a main residence. Individuals who carry out renovation or improvement actions in which at least 30% of the consumption of non-renewable primary energy, accreditable through the energy performance certificate of the home, or improvement of the energy rating of the home to obtain an energy class “A” or “B”, may be eligible. on the same rating scale. The deduction percentage is 40% of the amounts paid for the works carried out in the application period, up to a maximum of 7,500 euros per home. (maximum deduction base).
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Up to 60% deduction for renovation in primary residence
A 60% deduction may be obtained for renovation in primary residence for actions that reduce the consumption of non-renewable primary energy by 30%, or improve the rating by reaching the letters “A” or “B” in residential buildings. Its application period is from the entry into force of the RDL on 6 October 2021 until 31 December 2023, and these must be improvement actions that affect the building as a whole. Individuals whose building has been carried out improvement or renovation works in which a reduction of at least 30% in the consumption of non-renewable primary energy, accreditable through the building’s energy performance certificate, or an improvement in the building’s energy rating to obtain an energy class “A” or “B”, may be eligible. on the same rating scale. The deduction percentage is 60% of the amounts paid for the works carried out in the application period, up to a maximum of 15,000 euros per home, (maximum deduction base).
Common rules for the different types of deduction for rehabilitation
As reported by the Tax Agency on its website, there are certain rules common to the different types of deduction for rehabilitation that we have to take into account. The first is that the above deductions are incompatible with each other with respect to the same work. The amounts must be paid, by credit or debit card, bank transfer, cheque or deposit in accounts in credit institutions, to the persons or entities that carry out such works. As well as the persons or entities that issue the aforementioned certificates, having to deduct those amounts that, where appropriate, have been subsidized through a public aid program or were going to be subsidized by virtue of a final resolution of the granting of such aid. In no case shall the amounts paid by means of deliveries of legal tender money be entitled to deduct. The amounts paid must be necessary for the execution of the works, including professional fees, costs of drafting technical projects, construction management, cost of execution of works or facilities, investment in equipment and materials and other expenses necessary for their development, as well as the issuance of the corresponding energy performance certificates. The amounts paid for the costs related to the installation or replacement of equipment that uses fossil fuels do not give the right to a deduction. The deduction for the renovation of a primary residence entitles works that have reduced the consumption of non-renewable primary energy, by at least 30 percent, or the improvement of the building’s energy rating to obtain an energy class “A” or “B”, on the same rating scale.
Energy efficiency certificate for regular deduction of the home
To achieve this deduction, it is necessary that these points are accredited by means of the energy efficiency certificate of the home issued by the competent technician after the completion of the works, with respect to the one issued before the start, with a maximum of two years, of the same. Energy performance certificates will have to be issued and registered in accordance with the provisions of Royal Decree 390/2021, of 1 June, which approves the basic procedure for the certification of the energy performance of buildings. In order to prove compliance with the requirements for the practice of these deductions, certificates issued before the start of the comprehensive renovation will be valid provided that a period of two years has not elapsed between the date of their issuance and the start of the same. So now you know, all comprehensive renovations carried out between October 6, 2021 and December 31, 2023 are eligible for this beneficial deduction for renovation in primary residence.
Seize the moment and let Kaleidoscope guide you by the hand in this beautiful process of getting the house of your dreams. Don’t wait any longer!
