Ecobonus 2018: what’s new about the tax deduction for energy saving?
With the 2018 Budget, the extension of the tax rebate for energy upgrading works has been made official. For private homes, the deduction will be available until 31 December 2018, while for apartment buildings it will be in force until 2021.
The ecobonus is one of the most successful tax breaks for people carrying out work on their homes: the bonus consists of a tax deduction of 65% of the amount of the costs incurred. With the extension, however, some important new conditions have been introduced regarding the amount of the rebate for certain types of eligible expenses, differentiating the rates. Some expenses will benefit from the 65% Irpef discount while others will be reduced to 50%.
A new condition that has not been well accepted by manufacturers and companies but which, barring last-minute changes, will be one of the tax innovations for citizens from 1 January 2018. The complete guide to the Ecobonus on energy-saving works is provided below, with the list of deductible expenses and works for which the Irpef bonus can be claimed in the tax return.
Ecobonus 2018: what’s new?
In addition to the renovation bonus, one of the confirmed aspects already announced in the first text of the 2018 Budget is the extension of the Ecobonus also to energy-saving works carried out from 1 January next year. However, there are many new conditions, because the Irpef deduction under the Ecobonus will no longer be 65% for all work carried out, but will be reduced to 50% for:
- replacement and installation of windows and French windows;
- replacement and installation of winter heating systems with the installation of condensing and biomass boilers;
- installation of sun shading
As is currently the case for apartment buildings, it will also be possible to opt for the assignment of the credit in the case of works carried out on individual building units.
To allow even low-income households to carry out energy upgrading works benefiting from the Ecobonus, the 2018 Budget also set up the National Energy Efficiency Fund: it will be easier to access loans and financing to carry out upgrading and renovation works at home.
For works carried out in common parts of apartment buildings, the Ecobonus will instead be in force until 31 December 2021, with the possibility of benefiting from the tax deduction of up to 75 per cent. Apartment buildings with insufficient funds can opt for the assignment of the credit to banks and credit institutions.
Given the important changes introduced, it is likely that the Inland Revenue will publish a new guide to the 2018 Ecobonus. In the meantime, let us try to understand how the 65% Irpef deduction works, what expenses are allowed and on what works it is applicable.
Ecobonus 2018: expenses and works eligible for deduction
The Ecobonus 2018 allows tax deductions for energy-saving works and expenses, i.e., aimed at improving the energy efficiency and performance of the home.
Specifically, the 65% or 50% benefit for housing upgrading works covers all work and expenses incurred for the purpose of:
- thermal upgrading of the building (insulation, floors, windows and windows and French windows)
- installation of solar panels
- replacement of winter heating systems
- home automation interventions, i.e., installation of multimedia devices for the remote control of heating systems
Expenditure for which the Ecobonus can be claimed also includes the cost of the purchase of energy-saving materials and professional services for installation, such as home automation works. Irpef or Ires taxes relating to both the costs of building work and professional services are deductible. The only prerequisite is that these expenses must be among those made with the aim of improving the building’s energy performance.
Maximum deductible amount
The maximum amount of expenditure eligible for the Ecobonus in 2018 and for determining the amount of the IRPEF or IRES deduction is set as follows:
- € 100.000 for energy upgrading work
- € 60.000 for work on the building envelope
- € 30.000 for the replacement of winter heating systems, i.e., installation of systems equipped with condensing boilers, high-efficiency heat pumps and low-enthalpy geothermal systems
- € 60.000 for the installation of solar panels for the production of hot water for domestic or industrial use and to cover hot water needs in swimming pools, sports facilities, nursing homes, schools and universities
Ecobonus for apartment buildings up to 75% also in 2018
As we have already said, the 65% deduction also applies to documented expenses incurred by the taxpayer for works on the common parts of apartment buildings or affecting all the building units in each apartment building, borne between 6 June 2013 and 31 December 2021.
Ecobonus, i.e., the IRPEF or IRES deduction, rises to 70% for work to the envelope covering more than 25% of the building’s surface area, and to 75% for improving the winter and summer energy performance. The amount of expenditure on which the Ecobonus deduction is to be calculated is € 40,000 multiplied by the number of building units that make up the building.
As of 1 January 2017, autonomous social housing associations, however denominated, are also eligible for the deduction.
Who can apply for the Ecobonus
The tax deduction for energy-saving and upgrading work on a home or apartment building, i.e., the 2018 Ecobonus, is available to all taxpayers, including owners of companies, who own a property on which energy-related upgrading work is carried out.
As of 2018, taxpayers with insufficient funds who are unable to claim the tax deduction for expenses incurred in private buildings will also be able to claim the tax deduction: in practice, these are people who have tax-free incomes because they are below the minimum. Specifically, taxpayers who can claim the 65% tax deduction or the 75% tax deduction in the case of apartment buildings are:
- taxpayers earning business income (natural persons, partnerships, corporations)
- associations of professionals
- public and private entities not engaged in business activities
- natural persons, i.e.: holders of legal claims on property, owners of apartment buildings in the case of work on common parts, tenants, owners of the right to use the title, family members or cohabitees who bear the costs
Ecobonus only for works on existing buildings
It should be noted that the tax deduction is granted only on energy upgrading works carried out on existing residential units and buildings. Expenditure incurred during the construction of a new building is not eligible for deduction. As proof of the existence of the property for which the Ecobonus is being claimed in 2018, it will be necessary to provide the registration with the land registry or the application for registration, or receipts of payment of the Ici or Imu municipal taxes.
How to claim the 2018 Ecobonus tax deduction
The method for reimbursement of the Ecobonus for the expenses incurred is the same as previous editions of the tax deduction: it is reimbursed in instalments over 10 years. The right to benefit from the tax deduction must be claimed when filling out the tax return, but not only. To be entitled to the tax deduction and the IRPEF or IRES rebate, special attention must be paid to the documents to be kept for the certification of the energy upgrading work carried out.
Documents to keep
The Inland Revenue has specified that the 2018 Ecobonus is granted only with the submission by the taxpayer who bore the renovation expenditure of the following documents:
- affidavit of a qualified technician or declaration made by the construction manager
- proof of participation in a training course in the case of the self-installation of solar panels
- energy certification of the building provided by the region or local authority or energy classification certificate prepared by a qualified professional.
Based on the rules currently in force, the information sheet of the work carried out and the copy of the energy upgrade certificate must be transmitted electronically to ENEA within 90 days following completion of the energy upgrading works. If the works concern more than one tax year, the expenses incurred in previous periods must be reported to the tax authorities. In this case, the submission must be made within 90 days following the end of the tax period, either electronically or through authorised brokers.
Please consult the ENEA guide published in August 2017 for more information.
Method of Payment
The Inland Revenue has also specified that the payment rules vary:
- in the case of taxpayers who do not have a business income, the payment of costs must be made exclusively by bank or postal transfer. Taxpayers paying by bank transfer must indicate the reason for the payment, the tax code of the recipient of the deduction, the VAT number or the tax code of the person in whose favour the payment is made;
- taxpayers with business income are not subject to the obligation to pay by bank transfer, but it is important to keep appropriate documentation for proof of expenditure.
It is important to remember that the Ecobonus cannot be combined with the 50% renovation bonus, also confirmed for 2018. Taxpayers will have to decide which of the two tax benefits to take advantage of if the renovation of the property falls under both possible concessions. In the case of major renovations, the taxpayer will be able to split the expenses between the two incentives to achieve the maximum possible savings.