Renovation detractions: which interventions can access the fiscal relief provided by the renovation bonus?
The renovation deduction is available to all taxpayers. The renovation bonus 2016 is regulated by art. 16-bis of DPR 917/86 (Tax Code) which, thanks to some supplements and circulars issued by the Agenzia delle Entrate, clarifies which interventions are eligible for the renovation deductions.
Renovation Bonus 2016 on second homes
The drought tax relief is also applicable in cases where renovations are carried out on a second home owned by the taxpayer. The only condition to access the renovation deduction on a second home is that it must be used as an officially registered residence.
The deduction is equal to 36% of the expenses incurred, up to a maximum amount of €48,000 per unitary property. This means that the taxpayer can obtain fiscal relief for both their primary and secondary homes using the same methods and with the same maximum allowable expenditure of €48,000. In cases where the renovation intervention involves the upgrading of the building’s energy class (both primary and secondary home), the deduction rate increases to 65%. In this case, the maximum amount is €99,999.
Renovation Interventions
The following works can be carried out and deducted at the time of declaring income:
- Altering roof heights in line with existing volumes: If you want to make the attic habitable, you can access the deduction.
- Creating windows for air circulation purposes:
- Replacing doors and windows
- Demolishing and rebuilding the building faithfully
- Creating a balcony
- Building a loft
- Constructing a new bathroom
- Rearranging bathroom layout
- Increasing surface area and volume of existing premises according to the Housing Plan
- Installing air conditioning and air recycling equipment, such as those for controlled ventilation systems
- Buying an enclosed box car with property connection
- Renovating the garage
- Building a parking lot
- Creating a box car with property connection
- Installing elevators and hoists
- Acquiring and replacing boilers with specific tax deductions
- Installing security systems
- Replacing sanitary fixtures and water faucets in bathrooms
- Video intercoms
- Widening doors and windows
- Merging adjacent units or other properties owned by the taxpayer
- Replacing or repairing heaters and air conditioning equipment, with tax-deductible expenses for energy-saving systems
- Building and installing external gates of new construction; only if the new gate has different features than the existing one, is possible to access the deduction
- Creating internal canopies
- Renovating or building up central water towers or heating plants
- Replacing or installing security cameras, intercoms, and video intercoms
- Energy-saving interventions such as Davanzali of windows and balconies
- Rethinking facades
- Refacing or reconstructing the drain system
- Renovating or constructing a garage
- Installing an autonomous internal heating system, only if it is in line with DM 37/2008 – ex law 46/90
- Building or renovating the boiler room
- Constructing walkways on private property
The specific rules for each intervention can vary. For example, the purchase of a box car can only be deducted at cost after deducting the profit made by the seller.
Eligibility and Maximum Amounts for Renovation Interventions
The maximum amount that can be claimed as a deduction is €48,000 per unitary property. However, if the renovation involves upgrading the building’s energy class (both primary and secondary home), the maximum amount increases to €99,999.
In addition to these limits, there may be specific rules for certain interventions:
- Roof height alteration: The intervention must be in line with existing volumes.
- Windows creation: The windows must be created solely for air circulation purposes.
- Energy-saving systems: These are only eligible if they meet specific requirements.
Specific Rules and Restrictions
There may be additional rules or restrictions that apply to certain interventions:
- Demolition of a building: This is subject to specific regulations and must be carried out in compliance with local ordinances.
- Construction of new walls or partitions: These are only eligible if they serve a valid purpose, such as increasing the property’s value.
Deduction Calculation
The deduction amount is calculated based on the total cost of the renovation interventions. The taxpayer can claim a maximum of 36% of this cost, up to a maximum amount of €48,000 per unitary property.
However, if the renovation involves upgrading the building’s energy class (both primary and secondary home), the deduction rate increases to 65%, up to a maximum amount of €99,999.
Additional Benefits
In addition to the tax deductions, taxpayers may also be eligible for additional benefits, such as:
- Increased property value: Renovation interventions can increase the property’s value, making it more attractive to potential buyers.
- Improved living conditions: Renovations can improve the quality of life for the taxpayer and their family members.
Case Study: Renovating a Secondary Home
Let’s consider an example where a taxpayer renovers their secondary home in a rural area:
The renovation involves installing solar panels, upgrading the building’s energy class, and creating a new balcony. The total cost of the renovation is €20,000.
Using the rules outlined above, the taxpayer can claim a maximum deduction of 65% of this cost, which would be €13,000.
In addition to the tax deductions, the taxpayer may also be eligible for additional benefits, such as increased property value and improved living conditions.
Tax Implications
The renovation bonus is subject to specific tax implications:
- Income tax: The deduction amount is included in the taxpayer’s income tax liability.
- Capital gains tax: If the taxpayer sells the property at a profit after renovating it, they may be subject to capital gains tax.
It’s essential for taxpayers to consult with a qualified tax professional or financial advisor to ensure they are taking advantage of all available deductions and benefits.