The window has just opened for making your annual income tax returns in Spain for the tax year 2021. As usual, there are several changes in the law, and in this article, we highlight a particularly interesting one for anyone who carried out property refurbishment last year. You may now deduct up to 60% of the costs of refurbishment and upgrades from your final tax bill.
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The new deductions are part of the property rehabilitation measures introduced in 2021 and they allow for between 20 and 60% on your income tax liability:
Deduction of 20% for improvement works that reduce heating and cooling use.
Deduction of 40% for improvement works that reduce the consumption of non-renewable primary energy.
Deduction of 60% for energy rehabilitation works in buildings.
What are the requirements and conditions for each deduction?
Deduction of 20%
To qualify for the deduction for works reducing the use of heating and cooling in the property, they must fulfill the following conditions:
- The work must be carried out between October 6 2021 and December 31, 2022.
- It must be for any property you own and live in or let long term (i.e., as a permanent home for the tenant). In the case of rental, the property must be let before December 31, 2023.
- The reduction in heating and cooling use must be at least 7% and proven by energy-efficiency certificates, one issued before the work took place and the other after its completion.
The maximum deductible amount is €5,000 per year and is for the tax period applicable after the issuing of the second energy-efficiency certificate. This certificate must be issued before January 1, 2023.
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Deduction of 40%
To qualify for the deduction for works reducing the consumption of non-renewable primary energy in a property, the following requirements apply:
- The work must be carried out between October 6 2021 and December 31, 2022.
- It must be for any property you own and live in or let long term (i.e., as a permanent home for the tenant). In the case of rental, the property must be let before December 31, 2023.
- The consumption of non-renewable energy must have gone down by at least 30% or the property’s energy-efficiency rating go up to A or B. This must be proven by energy-efficiency certificates, one issued before the work took place and the other after its completion.
The maximum deductible amount is €7,500 per year and is for the tax period applicable after the issuing of the second energy-efficiency certificate. This certificate must be issued before January 1, 2023.
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Deduction of 60%
To qualify for the deduction in works for energy rehabilitation in buildings, the work must meet the following requirements:
- The work must be carried out between October 6 2021 and December 31, 2022.
- It must be for any property you own and live in or let long term (i.e., as a permanent home for the tenant) in such a building. In the case of rental, the property must be let before December 31, 2023.
- The energy efficiency must have gone up by at least 30% or the property’s energy-efficiency rating raised to A or B. This must be proven by energy-efficiency certificates, one issued before the work took place and the other after its completion.
- Any parking spaces and storage rooms are included as part of the property.
- This deduction does not apply to any parts of the building used for business activity.
The maximum deductible amount is €15,000 per year and is for the tax period applicable after the issuing of the second energy-efficiency certificate. This certificate must be issued before January 1, 2024.
Other general considerations
All three deductions share the following requirements:
- All payments for the works must be made by credit or debit card, bank transfer, nominative cheques or deposit in accounts. Payments made by means of the legal tender are not deductible.
- The amounts paid for the works carried out are those necessary for their execution, including professional fees, technical project drafting costs, project management, cost of execution of works or installations, investment in equipment and materials, and other expenses necessary for their development, as well as the issuance of the corresponding energy efficiency certificates.
- Payments made for costs relating to the installation or replacement of equipment using fossil fuels are not eligible for deduction.
Get expert help with your income tax return
To ensure you benefit from all the deductions available to Spanish taxpayers, use our professional tax representation service. Get in touch to find out more.
Maria Luisa Castro
