12. Italian tax credit system
Updated: Jan 25, 2022
As the year ends, the positive news from site is, the foundations are complete, including the terrace around the building. This is great news, as we can start building walls on the first working day of January 2022. I had planned to visit Italy and the site in January, but my flight was cancelled, due to... what else? of course Covid. The airlines cancelled pretty much all the flights to Italy in January and those that are available, via via, cost a fortune. I have rebooked for the beginning of February, and fingers crossed it will go ahead as planned. There is a lot to discuss in the months ahead, and it is important that I am able to be there in person, to make decisions and to discuss and agree contracts for the technical works.
As it is the end of the year, this means that the Italian government has at last agreed upon the budget for 2022. This is especially interesting for us who are renovating this year, as there has been a lot of discussion about the extension of the tax credit system (or bonus system as it is commonly called). The good news is, the bonuses have been extended, and better still, the credit transfer system has also been extended. With this, we non residents can take advantage of the bonuses by selling the credit to a financial institution, for example a bank.
So what are the bonuses?
As you might have guessed the bonuses are tax credit which you get for renovating your home and making improvements to its' seismic and energy qualities. There is another, for those who wish to renovate the facade of their building, but the building must be in a "centro storico" to get this.
So the most talked about is certainly the Superbonus 110%.
The superbonus was launched on the back of the corona crisis. It means the government will give you a tax credit of 110% of what you spend renovating your property. It might sound too good to be true, but in fact it has been a very successful tool in getting the construction industry up and going again. There are of course restrictions and limits to how much you can get relief for. I shall concentrate on the situation for a villa/single family home, as it is here where my knowledge lies. Even then, this is based upon my readings and experience and must not be seen as a full guide. All situations are a little different and you will need the help of a qualified technician (Geometra/Architect/Engineer) and an accountant to go through the process. I believe there are 38 documents that have to be filled out and confirmed. I am very therfore very happy to have my team, spearheaded by Diego.
The Superbonus is made up of two parts; the superSismabonus and the superEcobonus.
The "Sismabonus" is for structural improvements and has a limit of €96 000 per cadastral property. The seismic performance of your property must be improved by two classes and registered with the authorities.
The "Ecobonus" is for improving the energy performance of the property. There are two main parts to this, insulation of the building and thermal plant replacement. Note that a heating system must be existing to qualify. you must do at least one of these and the improvement of the buildings energy performance must be calculated and registered and be improved by at least two grades. Without this, you do not qualify.
The maximum contribution for insulation is €50 000 and for heating systems is €30 000.
Further, if you manage to complete this, there are a number of other opportunities that fall into the 110% category; windows, photovoltaics and accumulators, building automation and electric car charger installations. These all have their own limits.
All of these are cumulative and if you are doing a full renovation, one can save a lot, whilst improving the safety and comfort of your home. This will not necessarily cover all the costs involved! You will in general not get everything for free and you most likely will have to front a lot of the expense until it is repaid to you, first as a tax credit and then from a bank. The bank will also take its' share, but they will usually pay at least €100 for every €110 of credit, therefore paying for the improvements within the category limit.
If you are going to enter the superbonus you will have to be quick as
30% of the works must be complete by the 30th June 2022.
The superbonus came to be, as a temporary improvement to already available tax credits. The good news is that these have also been extended, as has the possibility of selling these credits. Earlier, before Covid, it was not possible to sell these credits and therefore of little interest to non residents, as we didn't have enough taxable income. Now, however they are available.
The renovation bonus 50%
This is probably the most flexible bonus and can be used for most things. It has a limit of
€96 000, giving you a credit of €48 000 (the amount you can sell to the bank). This bonus can be combined with other bonuses, with some restrictions especially seismic bonuses. In combination with a seismic bonus, the total amount of work that can be credited cannot exceed €96 000.
The "normal" ecobonus has the same requirements and has the same limits as the 110% ecobonus, but with less return. The documentation is a little less, but still the improvements must be accounted for etc. There are various limits for various categories and these are cumulative. The ecobonus can be fully combined with the above renovation bonus.
Sismabonus with a maximum return of 85% (there are various categories)
The sismabonus has a maximum of €96 000 of work as before, with a reduced percentage return. The seismic improvement must be at least 2 classes and can be combined with ecobonus. This is for structural work and for works to repair any damages done whilst carrying out the work.
Facade bonus 60%
Before, this was 90%, but now has been reduced. It has no financial limit, but is very specific as to what it can be used for. It can only be used in a historic center and only for the facade. It is not allowed to change the facade and its' decor, nor can it be used for windows.
A bank will pay up to €85 per €100 for a "normal" credit. This is because it is spread out over 10 years, whereas the superbonus from 2022 will be for only 4. The normal bonuses have been extended to the end of December 2024, with the exception of the facade bonus, which has been extended until the end of December 2022, the same as the superbonus for villas/single family homes.
I hope this helps give a general insight to the system. Don't be afraid to ask questions if you are interested. I will do my best to answer.
As I mentioned before, I was interviewed by the Daily Express (a newspaper in England)
about the project and the bonus system
Stay safe everybody and may I take the opportunity to wish you all a wonderful new year!
Best wishes to you all!
I hope you are enjoying the posts. Tell me what you like and/or dislike about them. I know a lot of you are Norwegian (my home), is there anything I can explain better or needs translating? Do any of you dream of a place in Italy? Can I help you begin to realise your dream?
#superbonus #Italy #renovation #buildingadream