Housing rehabilitation: the BOE publishes the aid and incentives, which start rolling today

This Thursday, the plan designed by the Government to encourage the energy rehabilitation of the Spanish residential stock is launched, one of the objectives included in the Recovery Plan that channels European funds. The Official State Gazette (BOE) published yesterday the regulations that regulate the battery of measures deployed by the Executive, and which is largely nourished by ambitious direct aid and tax relief. The Recovery Plan allocates 6,820 million euros to the housing item, with special emphasis on interventions designed to improve its efficiency. It will be the autonomous communities that manage the allocated amounts.

Deductions and aid

The plan establishes three types of deductions and aid, two designed for private homes and another designed directly for interventions in entire residential buildings.

Thus, for works in the main residence that reduce the demand for heating and cooling by 7%, something that can be achieved by installing high-performance windows, a 20% deduction is opted for, with a maximum of 5,000 euros per home per year. The deduction can be made in the tax period in which the energy certificate is issued, always before January 1, 2023.

Then, interventions that reduce the non-renewable energy consumption of the home by 30% or improve the energy rating to A or B may benefit from a 40% deduction, with aid of up to 7,500 euros per year.

In this case, the deduction of the amounts paid may be made from October 6, 2021 to December 31, 2022 in the case of the habitual residence or a rented house. Also in those that are offered in the rental market and are rented before the last day of the year 2023. As in the previous case, an energy certificate is once again necessary to validate the intervention.

In the last great assumption, a deduction of 60% and a maximum of 15,000 euros is reached for energy rehabilitation actions in residential buildings where consumption falls by 30% or certification A or B is achieved. In this case, the moment of deducted is in the years 2021, 2022 and 2023, in relation to the amounts paid in each of them, provided that the certificate had been issued before January 1, 2024.

The three deductions are incompatible with each other with respect to the same work. The deduction of 60% for the amounts invested in the rehabilitation of buildings is compatible with the deductions of 20% or 40% for actions in the private home, always considering that they are different works.

Income tax and VAT

The Superior Council of Architects of Spain and the General Council of Economists of Spain recently presented the Guide on tax relief for the rehabilitation of homes and residential buildings, where the new tax benefits and their articulation with the main taxes that affect the rehabilitation activity are exposed. : VAT and personal income tax. The objective of the document is to inform the general public of the potential of aid and tax developments.

For now, these public aids are exempt from paying personal income tax. In addition, in case of undertaking this type of reforms without requesting the subsidy, the total investment up to the tax limit can also be deducted in the declaration. It is the first time that this type of subsidies are exempt from income tax, a decision by the legislator to promote rehabilitation.

Regarding VAT, to qualify for the reduced rate it is necessary that the main purpose of the works is the construction of the building and that the cost exceeds 25% of the purchase price. The guide offers a practical example: if the value of a building is one million euros, this amount must be divided between the part that corresponds to the building – for example, 800,000 euros – and the part that corresponds to the land – the remaining 20%. –. In this case, to qualify for the 10% VAT, the cost of the works would have to be greater than 25% of 800,000 euros, that is, 200,000 euros.

Practical cases

As an example, the guide presents several practical cases that allow the impact of aid to be quantified. One of them is part of a comprehensive rehabilitation action in a building with 20 dwellings, as well as inside them. The total cost of the work carried out in the building amounts to 600,000 euros, with a grant of 376,000 euros. Each owner, therefore, has to assume an expense of 30,000 euros. However, between the direct subsidies and the total income tax deductions, the owner would obtain a total of 25,520 euros, so the final cost of the work would only amount to 4,480 euros.

Another case is that related to a work carried out in the habitual residence and that reduces the demand for heating and cooling by 10%. The amount of the action amounts in this case to 5,000 euros and a direct subsidy of 2,000 euros has been obtained, to which is added a bonus of 20%, which represents a saving of 600 euros more. The real cost of the intervention, therefore, drops to 2,400 euros.

The last example is that of a work carried out in a rented dwelling, which represents a reduction in the demand for heating and cooling by 10%. The amount of the action amounts to 9,000 euros and a subsidy of 3,000 euros has been obtained. In this case, the deduction for the characteristics and results of the intervention reaches 40% of the remaining 6,000 euros, that is, another 2,400 euros. For all these reasons, the final cost of the work would be 3,600 euros.

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