Tax profit of up to 6,400 euros from property renovation – how to get the “tax bonus”

Taxpayers who embark on a home renovation have an additional two years to take advantage of the tax credit of up to 40%.

It was decided to extend the measure until the end of 2024, in order to stimulate the real estate market, while at the same time being another incentive to upgrade energy in homes.

However, the prerequisite for those who wish to benefit from the tax deduction is that all transactions are made by electronic means of payment and that they receive the relevant service receipts from the professionals who will carry out the work on their property.

The measure gives incentives to owners to proceed with the energy upgrade of their apartments. The earnings of those who start to renovate their homes will be up to 1,600 euros “reduction” in taxes, per year and over four years. This means that each taxpayer can earn up to €6,400.

Of course, the final profit for each taxpayer will depend on the amount of money spent. In other words, if someone spends 5,000€ on renovating their home, they will earn a total of 2,000€, which will be deducted from their salary over 4 years. This means that for each year his taxes will be reduced by 500 euros.

The tax deduction for natural persons is up to 40% and applies to the renovation or energy upgrade of the property, provided that all transactions are made by electronic means of payment.

In particular, the law in effect until the end of the year for taxpayers to benefit from the bonus provides for the following:

1. The costs incurred by owners of homes and other buildings in the period from 1-1-2020 to 31-12-2022 to pay fees for services related to energy and the functional and aesthetic upgrade of their property will be reduced to 40% of their amount and income tax for the next four years.

2. The total amount of deductible expenses will be spread evenly over the next four years and the corresponding amount for each year will reduce the personal income tax estimated for the taxable owner in that year. In any case, a maximum of €16,000 will be applied to the amount of expenses that can be taken into account. In this way, the maximum discount that can be given to each owner is 6,400 euros, or 40% of the 16,000 euros.

3. Taxpayers who declare incomes of more than €16,000 this year will see the biggest profit. For them, the tax reaches or exceeds 1,600 euros per year if they are employed or retired.

4. The bonus relates only to the work of electricians, plumbers and other tradesmen and not to the cost of materials. This means that for calculating the discount, only business costs and not material supply costs will be taken into consideration.

5. Conditions for deducting 40% of the costs of energy charges and the functional and aesthetic upgrade of buildings from the income tax for buildings. The owner during the next 4 years is:

• Buildings whose costs have been incurred are not already included or will not be included in the building upgrade programme.
• Expenses must be evidenced by legal documents, that is, with receipts for retail transactions or with invoices for the provision of services by craftsmen
• Expenses were paid by electronic means of payment, i.e. by credit or debit cards, prepaid cards, through electronic banking services, using electronic wallet, etc. Expenses paid in cash are not taken into consideration.

It is indicated that the owners as long as the 40% deduction of renewal costs is in effect, they will not lose the 5% deduction on taxable income from rentals that relates to repair and maintenance expenses, valid each year and calculated. Automatically, without the obligation to submit supporting documents to the tax office.

40% tax reduction on property renovation or energy development. Who is entitled to a “forobonus”

The costs of receiving services recognized for carrying out this are as follows:

A. Energy

• Thermal insulation installation.
• Replacement of framing, glazing and exterior protective panels.
• Install or upgrade a heating/cooling system as well as the infrastructure and items needed to make it fully functional.
• Install devices to automatically control the operation of the heating / cooling system.
• Installation of a self-producing electricity system (with energy compensation), as well as electrical collector systems (batteries) when combined with photovoltaic systems.
• Installing a hot water production system using renewable energy sources (RES).
• Install a mechanical ventilation system with heat recovery.
• Upgrade the lighting for the common areas of the apartment building.

B. functional – aesthetic

• Installation / replacement of the hydraulic installation.
• Installation / replacement of electrical installations.
• Roofing maintenance/repair.
• Restoration/painting of construction works inside and outside buildings.
• Fixed or mobile shading systems installed.
• Upgrade or install the elevator.
• Installing internal charging points for electric vehicles.
• Changing or repairing floors.