Fiscal measures to stimulate housing rehabilitation

In 2010, the Council of Ministers approved the Royal Decree Law on Measures to Promote Economic Recovery and Employment. This Decree introduces fiscal modifications aimed at recovering activity in the construction sector by means of a fiscal boost for the rehabilitation of homes , also contributing to energy efficiency and savings . The creation of a new temporary deduction in personal income tax for improvement works on the current home and the application of a reduced VAT rate are the most notable measures.

To summarize, we highlight:

Fiscal measures on housing rehabilitation

1. Who can benefit from this deduction?
   Citizens whose taxable income is less than €53,007.20 per year.
2. Which works can benefit from the deduction?
   Works carried out in the habitual residence, or in the building in which it is located.
3. And within what time frame?
   From April 14, 2010 to December 31, 2012.
4. What should be the object of such works?
   In the terms of the State Housing and Rehabilitation Plan 2009-2012 (Royal Decree 2066/2008, of December 12):
   • Improve energy efficiency, hygiene, health and environmental protection in buildings and homes, and the use of renewable energy.
   • The safety and tightness of buildings, and in particular the replacement of electricity, water, gas or other supply installations.
   • Promote accessibility to the building or housing, such as:
     • Install elevators or adapt them to the needs of people with disabilities.
     • Works to adapt housing to the needs of people with disabilities or those over 65 years of age.
     • Install or improve access ramps to buildings.
     • Install information elements that allow orientation in the use of stairs and elevators.
5. What is the amount of the deduction? What are its limits?
   10% of the deduction base. The basis of this deduction is the amounts paid, by credit or debit card, bank transfer, personal check or deposit into accounts in credit institutions, to the persons or entities that carry out such works. The deduction will not be applicable if the payment of the invoice is made in cash. The deduction base has the following limits:
   • Per declaration: €4,000 per year, for taxpayers with a taxable base equal to or less than €33,007.20 per year.
   • For each residence: the accumulated deduction base corresponding to all tax periods in which it is applicable may not exceed €12,000 per habitual residence.
6. Is a reduced VAT rate applicable?
   Yes, for all types of renovation and repair work on housing carried out up to 31 December 2012, a reduced VAT rate is established. The concept of structural rehabilitation is also extended, both in VAT and in the Canary Islands General Indirect Tax, through the definition of works similar and related to structural works, which will allow the tax costs of this activity to be reduced.

Source: la-moncloa.es; assessoria-alarcon.com

For more detailed information click here.