Tax deductions for renovation works in Italy

6 Types of Tax Deductions for Renovation Works

Have you long been wishing to rebuild or renovate your home? Update it to the anti-seismic regulation? Make changes in your garden? You will find in this article a complete presentation of the bonuses available in Italy this year, 2020, along with a detailed list of the requirements and ways of using them. This will allow you to have tax deductions of 50% to 80%, depending on the requirements met. The tax deductions will be dispensed through reimburses to be discounted from future taxes, in several annual rates.

For example, one of our clients carried out renovation works on his home amounting to €60, 000 and he acquired €10,000 of furniture. He was able to use both the Restructuring bonus and the Furniture bonus, obtaining a total tax deduction of €35,000 (50% of €70,000), discounting this from future taxes, in 10 annual installments of €3,500 per year.

What is the restructuring bonus?

It is a bonus or extraordinary maintenance, restoration and renovation of the building unit.

What are the limits of the restructuring bonus?
The limits are expenses up to a maximum of €96,000.

What is the percentage of the deduction?
The deduction of 50% of the expenses must be divided into 10 equal annual installments.

What is the method of payment?
A bank transfer to the supplier, with a specific indication: Bonifico relativo a lavori edilizi che hanno diritto alla detrazione prevista dall’articolo 16-bis del Dpr 917/1986. Pagamento fattura n. ___ del ___ a favore di ___ partitia Iva ___ CF beneficiario detrazione ___.

What documents must be presented for the Income Statement?

  • Administrative documents regarding the type of work to be carried out (concession, authorization or communication of commencement of works). If these documents are not provided, a substitutive declaration confirming the start date of the works must be provided, in order to certify that the building renovation interventions put in place are among those that can be facilitated.

  • Invoices and tax receipts of the expenses

  • Payment transfer receipts

What is the eco bonus?

It is a bonus for energy redevelopment measures, such as reducing energy requirements for heating, improving the building’s heating system (insulation, floor and window systems), installation of solar panels, winter heating systems.

What are the limits of the eco bonus?
The spending limits for energy saving measures vary according to the type of intervention: from €30,000 (heating and air conditioning systems) to €60,000 (envelope: solar systems / window replacement) up to €100,000 (most relevant interventions on the while property).

What is the percentage of the deduction?
The deduction varies according to the type of intervention, from 50% to 65%, and must be divided into 10 equal annual installments.

What is the method of payment?
A bank transfer to the supplier with a specific indication: Bonifico relativo a riqualificazione energetica (articolo 1, commi 344-347, legge 296 / 2006. Pagamento fattura n.___ del ___ a favore di ___ partita Iva ___ CF beneficiario detrazione ___.

What documents must be presented for the Income Statement?
To benefit from the deduction it is necessary to make an online communication to Enea (Italian agency for research and development involving nuclear and alternative energies) about the work carried out, with an engineer certification that verifies the compliance of the intervention with the legal requirement.

  • Invoices and tax receipts of the expenses

  • Payment transfer receipts

What is the anti-seismic bonus?

It is a bonus for renovation interventions through the adoption of earthquake anti-seismic measures on buildings located in high-danger seismic zones (zones 1 and 2) and in lower risk areas (zone 3) identified by OPCM n. 3274/2003.

What are the limits of the anti-seismic bonus?
The limits are expenses up to a maximum of €96,000.

What is the percentage of deduction?
The deduction of 50% of expenses must be divided into 5 equal annual installments. When the intervention results in a reduction of seismic risk leading to transition to a lower risk class, the tax deduction is 70% of the expenditure incurred.

What is the method of payment?
The expenses must be paid by “dedicated” transfer showing the beneficiary’s tax number, the reason for the payment, and P.IVA or CF of the person in favour of whom the transfer is made.

What documents must be presented for the Income Statement?

  • Attestation by a technician of the building unit’s risk class before the intervention and attestation of the intervention’s conformity to the submitted project.

  • Invoices and tax receipts relating to expenses actually incurred.

  • Payment transfer receipts.

What is the furniture bonus?

It is a bonus for the purchase of new furniture and household appliances (energy class not less than A+).

What is the condition for entitlement to the deduction?
Having carried out the renovation of the building included in the restructuring bonus no earlier than 2019.

What are the limits of the furniture bonus?
The limits are expenses up to maximum of €10,000.

What is the percentage of the deduction?
The deduction of 50% of the expenses must be divided into 10 equal annual installments.

What are the methods of payment?
Expenses can be paid by bank transfer, credit card, debit card or financing.

What documents must be presented for the Income Statement?

  • Invoices and tax receipts relating to expenses actually incurred

  • Payment receipts

What is the facades bonus?

It is a bonus for interventions aimed at the recovery/restoration of existing building’s external facades (including painting, restoration of gutters, and others).

What is the condition for entitlement to the deduction?
The building must be located in an area of artistic and historical interest or with a territorial density not less than 1,5 mc/mq (zone A and B as identified by DM 02/04/1968 n. 14.444).

What are the limits of the facades bonus?
There are no limits.

What is the percentage of deduction?
The deduction of 90% of the expenses is divided into 10 equal annual installments.

What is the method of payment?
The expenses must be paid by “dedicated” bank transfer showing the deduction beneficiary’s tax number, the reason for the payment, P.IVA or CF of payment’s beneficiary.

What documents must be presented for the Income Statement?

  • Invoices and tax receipts relating to the expenses actually incurred

  • Payment transfer bank receipts

What is the green bonus?

It is a bonus for interventions on green uncovered private areas of existing buildings and irrigation systems, and construction of wells, green roofs, and roof gardens.

What are the limits of the green bonus?
The limits are expenses up to a maximum of €5,000.

What is the percentage of the deduction?
The deduction of 36% of the expenses is divided into 10 equal annual installments.

What is the method of payment?
A bank transfer.

What documents must be presented for the Income Statement?

  • Invoices and tax receipts relating to expenses actually incurred

  • Payment transfer bank receipts

This article was originally published in Tuscany’s Grapevine Magazine with the title Taxes in Italy: deductions for renovation works. 

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