Investments to increase energy efficiency can be tax deductible until the end of 2025.

Investments to increase energy efficiency can be tax deductible until the end of 2025.

The Spanish government has decided to extend the deadlines for owners and, in some cases, tenants to claim tax benefits when carrying out renovation work on their properties to improve energy efficiency. These tax reductions are taken into account when filing income tax returns (IRPF).

An essential prerequisite for benefiting from this tax advantage is the possession of an energy certificate, which is issued before and after the construction work and proves the increase in efficiency. This often represents a hurdle because not all owners know the conditions for the tax bonus in advance of the renovation.

The problem of the lack of an energy certificate is widespread and well known. However, an energy certificate can be issued retroactively by having an expert assess the condition of the building before construction work begins. This certificate must be officially registered, which is also a prerequisite for recognition.

The law stipulates that the passes must be issued before and after the work carried out. However, it remains questionable whether the tax office is flexible enough to recognize a subsequently created ID.

The tax relief includes three variants:

20% of the cost of renovation work that results in a reduction in the heating or cooling needs of a building: the work must be completed by December 31, 2024. A maximum annual investment of 5,000 euros can be claimed for tax purposes. Both owners and tenants can benefit from this advantage.

40% of investments for work that reduces the consumption of non-renewable energy: consumption must be reduced by at least 30 percent or energy efficiency class A or B must be achieved. Here too, an upper limit of 7,000 euros per year applies and the work must be completed by the end of 2024. Both owners and tenants can deduct the costs.

60% of the expenses for further energy-related renovation work: Owners who invest in renovation work for residential buildings by December 31, 2025 can deduct these costs. A maximum of 5,000 euros can be credited per year, although this can be accumulated up to a maximum of 15,000 euros.

This article was created by the tax and legal firm PlattesGroup based in Palma de Mallorca.