The income tax deductions for bet on energy efficency
From Feliu we thank the our manager Tamara Sandía because this text is based on a PowerPoint from her. It is April 11th, the income tax campaign begins.
Today we will analyze the three deductions on the energy efficiency. First of all, we will define this concept: 'ability to adjust our consumption to the real energy needs'. By the way, very often the contracted power is excessive: Finques Feliu recommends you to analyze carefully in order to avoid overpay.
Why are deductions been approved in this area? Because European Union has set as a public policy priority to reach carbon neutrality by 2050. In this link the institution itself explains what this means.
First tax benefit: "decrease in the consumption of heating or cooling systems".
a) By what percentage does it reduce consumption to carry out the works that give right to this tax rebate?
In at least 7% (7% is the consumption that supposes to take an additional degree of temperature).
b) Conditions of execution of the work in order to be eligible:
- Execution period: from 10/6/2021 to 12/31/2023.
- Place of execution: usual home, already built or expected to be built before 12/31/2024.
- Maximum date of issue of the certificates: before the works within a maximum of two years and after them before 01/01/2024.
- Period of application of the deduction: within the tax year in which the energy efficiency certificate is issued after the works have been carried out.
Do I have the right to the deduction if the certificate is issued in a tax period after the one in which the amounts were paid to carry out the works?
Yes. we will explain right now: in this case the deduction will be made in the second tax year. The deductible total will result from adding the amounts paid during the year of payment of the work and those of the subsequent fiscal year in which the certificate is issued.
- Tax benefit percentage: 20% of the amounts paid.
- Maximum annual base to apply it: 5.000 € per year, both for individual and joint taxation.
Second tax deduction: 'works to reduce the consumption of non-renewable primary energy'
Here legislator here introduces the concept of 'primary energy' , we define it right now: 'energy sources that are in nature and have not been transformed by human beings'.
There are renewable for instance, wind or solar and non-renewable such as, oil or gas. The deduction aims to make us less dependent on fossil fuels.
By what percentage do the works have to reduce consumption in order to apply the tax benefit? By 30%.
Can I make an alternative improvement to achieve this percentage? Of course. Carry out works to achieve that your home meets the two highest efficiency levels ('A' and 'B').
Conditions of execution of the work in order to qualify for the deduction:
- Execution period: from 10/6/2021 to 12/31/2023.
- Place of execution: usual home, leased for use as a habitat or expected to be so before 12/31/2024.
- Certificates of efficiency issued before the works (within two years) and after the works before 01/01/2024.
- Application deduction period: within the tax year in which the energy efficiency certificate is issued after the works have been carried out.
As mentioned above, you will also be entitled to the deduction if the issuance period is extended.
- Percentage of the deduction: 40% of the amounts paid.
- Maximum annual base to apply it: 7.500 € per year, both in individual and joint taxation.
Third deduction: 'designed to predominantly residential buildings'.
By what percentage must the consumption of the works be reduced in order to apply the tax rebate? By 30%.
Remember: there is also the option of doing work to transform your home into one that meets the two highest efficiency levels ('A' and 'B').
- Execution period: between 10/6/2021 and 12/31/2023.
- Place of execution: the building where the works are to be carried out must be in a residential building.
- Date of issue of the efficiency certificates: before the works (within two years) before 01/01/2025.
- Years of application of this tax benefit: 2021, 2022, 2023 and 2024 in accordance with the amounts paid in each of them, provided that, before the end of the tax period in which the deduction is applied, the energy efficiency certificate has been issued.
Maximum annual base to apply it: 5.000 € per year or accumulated of 15.000.
Maximum percentage of the deduction: 60% of the amounts paid.
Final point: what are the right deductible concepts in each of the cases analyzed?
It is important to answer this question because applying deductions to concepts not foreseen by the legislator in Spain implies a 15% penalty on the amount received.
According to the law, the right concepts to which the deduction is applied are:
1. Amounts paid for work completed
2. Actions required for its execution as follows:
- Professional fees
- Drafting technical projects costs,
- Construction management
- Costs of works and installations
- Investment in equipment and materials,
The legislator warns that the amounts coming from public subsidies are not deductible concepts. The reason is that the deductions reward our investment, by definition, a public benefit comes directly from the taxes that we all pay. Finally, in the Owners' Community only the works done in accordance with the participation coefficient will be taken into account.
For any additional questions Finques Feliu is at your disposal.