- The split among regions earmarks 1,389 million for residential renovation and another 500 for social rental housing.
- The regions manage the aid; for the owner, the key routes are regional calls and the personal income tax deductions.
- Energy-efficiency deductions require a certificate and have deadlines, so works should be planned.
At its meeting of 23 August 2022 the Council of Ministers approved the distribution among the autonomous communities, Ceuta and Melilla of 1,889 million euros of EU Recovery Plan funds. Of these, 1,389 million go to residential renovation programmes and can be transferred in 2022, and 500 million, from 2023, to building social rental housing. The split follows each region’s number of households.
The Minister of Transport, Mobility and Urban Agenda, Raquel Sánchez, estimated that the programme could generate around 180,000 jobs, many of them among self-employed workers and small and medium-sized renovation firms. For owners and residents’ associations the news matters because these funds finance aid that, well managed, lowers the cost of renovating and improving a home’s energy efficiency.
How the aid reaches owners
The Government distributes the money, but running the calls is up to the autonomous communities, which set deadlines, requirements and amounts. It is therefore worth checking the call in the region where the property is, because conditions can vary. The funds are aimed at the renovation and urban regeneration of homes, neighbourhoods and buildings using energy-efficiency criteria.
In residents’ associations, the decision to carry out works and apply for aid goes through the owners’ meeting, with the majorities required by condominium law. A qualified technician must issue the energy performance certificate before and after the works, a key document both for aid and for tax deductions, and one that should be commissioned in good time.
Income tax deductions
Besides aid, since October 2021 personal income tax allows three deductions for energy-efficiency works. One is 20% of what is paid, with a maximum base of 5,000 euros a year, if the works cut heating and cooling demand by at least 7%; another is 40%, with a maximum base of 7,500 euros a year, if they cut non-renewable primary energy consumption by at least 30% or reach energy class A or B. Both apply to works carried out up to 31 December 2022, on the main home or a home let as housing, and not on the part used for an economic activity.
The third, 60%, covers energy renovation works on a predominantly residential building up to 31 December 2023, with a maximum annual base of 5,000 euros and a cumulative cap of 15,000, for works achieving the same results. The post-works certificate is required, payment must be by means other than cash, subsidised amounts are deducted and equipment using fossil fuels does not count.
What to review
Before commissioning works, check that the project fits the region’s call, apply for aid, where relevant, before work starts and keep invoices, quotes and certificates. Since the deduction base is reduced by the subsidised amount, aid and deduction cannot be stacked on the same sum. When the works are promoted by a residents’ association, each neighbour’s deduction is calculated according to their participation share in what the association pays. It is prudent to discuss this with your tax adviser.
Deadlines matter: the first two deductions end with 2022, so works that want to benefit must be finished and paid for in time, and the certificate issued. A realistic schedule with the technician avoids losing the benefit. This is general information and does not replace the analysis of each case.
Renovating is today one of the few improvements with both public and tax support, but only for those who plan it.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
