Tax advantages for energy rehabilitation projects in buildings and homes

From October 6, 2021, investments in rehabilitation works that improve the energy efficiency of homes enjoy deductions in the Personal Income Tax (IRPF).

Royal Decree-Law 19/2021, of 5 October, on urgent measures to promote the rehabilitation of buildings, within the framework of the Recovery, Transformation and Resilience Plan, introduces tax deductions for works to improve energy efficiency in houses. These deductions will be applied to investments made in rehabilitation works that involve an improvement in the energy efficiency of the usual or rented property for use as housing, in accordance with the legislation on urban leases.

The approved personal income tax deductions are as follows:

1. Deduction of 20% for works that reduce by 7% the demand for heating and cooling in habitual housing

• Dwellings in which the works can be carried out: habitual residence of the taxpayer or any other of his ownership that he has rented for use as a dwelling or in anticipation of rent, provided that, in the latter case, the dwelling is rented earlier of December 31, 2023. Does not apply in the case of work carried out in parking spaces, storage rooms, gardens, parks, swimming pools and sports facilities and other similar elements, or in the part of the house that affect an activity.
• Deductible works: those that have reduced the demand for heating and cooling of the home by at least 7%. This data must be certified 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.
• Period of realization of the works: from October 6, 2021 to December 31, 2022.
• Deduction percentage: 20% of the economic amounts for works carried out in the period of application between October 6, 2021 and December 31, 2022.
• Maximum limit: 5,000 euros per home.
• Tax period in which it applies: the one in which the energy efficiency certificate issued after the works has been issued, which in any case must be issued before 1 January 2023.
• Who can be accommodated: natural persons who meet the above requirements.

2. Deduction of 40% for works that reduce the consumption of non-renewable primary energy by 30%, or improve the energy rating by reaching the letters “A” or “B” in habitual residence.

• Dwellings in which the works can be carried out: habitual residence of the taxpayer, or any other of his ownership that he has rented for use as housing at that time or in anticipation of rent, provided that in the latter case, the dwelling is rented before December 31, 2023. Does not apply when the work is carried out in parking spaces, storage rooms, gardens, parks, swimming pools and sports facilities and other similar elements, or in the part of the home that affects an economic activity.
• Deductible works: those that have reduced the non-renewable primary energy consumption indicator by at least 30%, or that achieve an improvement in the energy rating of the home to obtain an energy class "A" or «B», on the same rating scale. This data must be certified by means of the energy efficiency certificate of the home issued by the competent technician after the works have been carried out, with respect to the one issued before the start, with a maximum of two years.
• Period of realization of the works: from October 6, 2021 to December 31, 2022.
• Deduction percentage: 40% of the economic amounts for works carried out in the period of application between October 6, 2021 and December 31, 2022.
• Maximum limit: 7,500 euros per home.
• Tax period in which it applies: the one in which the energy efficiency certificate issued after the works has been issued, which in any case must be issued before 1 January 2023.
  • Who can be accommodated: natural persons who meet the above requirements.

3. Deduction of 60% for works that reduce by 30% the consumption of non-renewable primary energy, or improve the qualification by reaching the letters A or B in buildings of predominant residential use

• Buildings where the works can be carried out: homes owned by the taxpayer, located in buildings of predominant residential use, and parking spaces and storage rooms acquired with them. It does not apply to the part of the house that affects economic activities.
• Deductible works: those that have reduced the non-renewable primary energy consumption indicator by at least 30%, or that achieve an improvement in the building's energy rating to obtain an energy class "A" or «B», on the same rating scale. This data must be certified by means of the energy efficiency certificate of the home issued by the competent technician after the works have been carried out, with respect to the one issued before the start, with a maximum of two years.
• Period of realization of the works: from October 6, 2021 to December 31, 2023.
• Deduction percentage: 60% of the economic amounts for works carried out in the period of application between October 6, 2021 until the end of the tax period, when the certificate was issued in the tax period. When the certificate has been issued in a previous tax period, the 60% deduction rate will be on the amounts paid per year.
• Maximum limit: the accumulated base of the deduction cannot exceed 15,000 euros.
• Tax period in which it applies: in principle it can be applied in 2021, 2022 and 2023. However, it is a requirement to be able to apply the deduction that the energy efficiency certificate issued after the works has been issued. These certificates must be issued by January 1, 2024.
• Who can be accommodated: natural persons who meet the above requirements.