Building Renovations

– What are the Building Renovations
– Maximum ceiling of building renovation incentives
– Field of building renovations’ application
– Subjects admitted to the incentives
– Incentivable measures
– How to Access the incentives for building renovation
– To follow up…

Update 2018 | Budget Law 2018 (SOGU No. 62 of 29 December 2017)

Reconfirmed throughout 2018, but with a variation: in analogy to what is already provided for tax deductions regarding energy requalification of buildings, the information on the carried out interventions must be transmitted electronically to ENEA .

1. What are the Building Renovations

The building renovations are all of those measures which have as their aim the redevelopment , improvement and adaptation of buildings for residential use, be it a single house or a condominium.
There are different operations that can benefit from this tax deduction, such as the extraordinary maintenance carried out on individual property units, the ordinary maintenance carried out on common parts of condominium buildings and, among other interventions, also those aimed to create energy saving.
It is possible to deduct from the IRPEF (personal income tax) a part of the charges incurred to renovate the dwellings and the common parts of residential buildings located in the State’s territory.
The deduction must be divided into ten annual installments of the same amount, payed during the year in which the expenditure is incurred and so on.

2. Maximum ceiling of building renovation incentives

The 2017 Budget Law (Law No. 232 of 11 December 2016) has extended the possibility to take advantage of the greater IRPEF deduction ( 50% ) to the 31rst December 2017, confirming the maximum spending of 96,000 euros for each estate units.
From the 1rst January 2018 the deduction will return to the ordinary percentage of 36% and with the limit of 48,000 euros for each eastate units.
The spending line is annual and concerns the individual property and its appliances, considered as a unit, even if they are stacked separately. The building interventions carried out on the “appliance” don’t have an autonomous expenditure limit, but they belong to the limit set for the housing unit.
If the measures carried out in each year are simply the continued work begun in previous years, to determine the maximum line of deductible expenses must be taken into account only those incurred in the same years: you will be entitled to the deduction only if the cost, for which was already used the same deduction, did not exceed the provided line.

3. Field of building renovations’ application

The tax deduction for restructuring applies to expenses incurred for measures on:

– single residential units
– housing units that are part of condominium buildings
– common parts of condominium buildings

Only natural persons are beneficiaries of the deduction, consequently they can proceed with the tax deduction from IRPEF taxes.
Buildings of other nature or of intended use can access other benefits related to energy saving and energy redevelopment (e.g the Thermal Account).

4. Subjects admitted to the incentives

All taxpayers subjected to personal income tax (IRPEF), resident or not in the State’s territory, may benefit from the deduction on the renovating costs. The deductible expenses are in fact only related to measures carried out on the dwelling or on common parts of residential buildings.
The advantage belongs not only to property owners but also to real / personal rights’ holders, which are object of measures and sustain the relative expenses:

-owners or bare owners
-holders of a real right to use proprerties (usufruct, use, housing or surface)
-tenants or borrowers
-members of divided and undivided cooperatives
-individual entrepreneurs, for properties not included among the capital goods or merchandise ones
-entities indicated in article 5 of the Tuir, which produce incomes in associated form (simple company, in a collective name, limited partnership and entities equivalent to these, family businesses), under the same conditions as for individual entrepreneurs.

The deduction was also designed for those who do not own the property, but benefit from the improvements that can be achieved with them, thus allowing a tenant or usufructuary to do the same and benefit from tax relief.

5. Incentivable measures

Among operations on residential real estate units and on residential buildings to which tax relief belongs, those relating to air conditioning systems are also provided, only if it has been proven that these have a particular aim: achieve energy savings .
The realization of renewable energy plants is equivalent to the realization of measures to create energy savings.
These measures include those that consider the use of gas heat pumps, be they aerothermal, hydrothermal or geothermal, which make an important contribution to energy saving thanks to the use of energy from renewable sources.
In addition to the expenses incurred for the purchase of heat pumps, among the deductible expenses may also be included those for labor and those related to materials.
In addition, are considered deductible, the expenses related to:

– planning and other related professional services;
– professional services required by the type of intervention;
– the costs for the restoration of buildings pursuant to Ministerial Decree 37/2008 – ex Law 46/90 (electrical systems) and the Unicig standards for methane plants (Law 1083/71);
– the purchase of materials;
– the fee paid for the report of compliance of works with law;
– the expenses for the execution of appraisals and inspections;
– the value added tax, the stamp duty and the fees paid for the concessions, authorizations and complaints of the starting works;
-urbanization costs;
-the other possible costs strictly connected to the realization of the interventions as well as to the fulfilments established by the regulation for the implementation of facilitated interventions (Decree No. 41 of 18 February 1998).

6. How to Access the incentives for building renovation

In summary it is sufficient, to benefit from the tax deduction, to indicate in the tax return the property identification data and, if the works are carried out by the holder, the registration details of the deed that constitutes the title.
The tax payer who benefits from the deduction must keep and possibly show the following documents in case of request:

– invoices showing the costs incurred;
– receipts for carried out transfers related to expenses;
– application for stacking (if the building is not yet registered);
– receipts for payment of municipal tax (Ici-Imu), if due;
– Shareholders’ meeting resolution approving the execution of works (for measures on common parts of residential buildings) and millesimal tables for allocating the expenses;
– owner’s declaration of consent to the execution of works, for the measures made by the owner of the property, if different from the cohabiting family members;
– administrative permits required by the current building legislation in relation to the type of work to be carried out (concessions, authorizations, etc.) or, if the legislation does not provide any qualification, it is requested a substitutive declaration in which are indicated the starting date of work and the eligibility of the interventions.

A communication (with registered letter or other methods established by the Region) must be sent to the local health authority responsible for the territory with the following information:

– generality of the client of works and location of the same;
– nature of the measure to be carried out;
– identification data of the company executing works with explicit assumption of responsibility by the same, in order to comply with the obligations set by the current legislation on safety at work and contribution;
– starting date of the recovery measure.

7. To follow up …

For all the details about the tax deduction for building renovations, the guide “Building Restructuring: Tax Benefits”, updated to 22 September 2017, is available on the website of the Revenue Agency .