The Italian government wants you to improve your home. Or at least, it wants property owners to spend money on home improvements such as thermal insulation and solar power that gives work to Italian workers, as it coaxes the economy out of the post-Covid slump.
It has proposed a ‘Superbonus’ tax deduction of 110% – effectively paying you to make your property more energy efficiency and safe from earthquakes.
Under the Superbonus 110 scheme you apply for a tax rebate for the work which increases the energy efficiency of your home. Alongside it, you can also take measures to improve the earthquake protection of your home under a similar scheme known as the 110% Sismabonus.
The schemes get a little complicated, so it is important to speak to an Italian lawyer before committing to a purchase. Even so, they offer a real incentive to property buyers and renovators who pay taxes in Italy.
When planning improvements, look out for the phrase “Interventi trainanti” (driving interventions). These are the elements of the improvements you need to incorporate to obtain the 110% tax benefit. Home improvements such as new windows and the renovation of facades were already part of other bonus schemes, offering smaller discounts. However, if completed alongside work listed under the Superbonus you may also be entitled to the higher 110% Bonus.
How long is the tax credit in effect?
The scheme has already revved up the construction and related industries since its launch. It is valid for expenses incurred from 1 July 2020 until the end of 2021, and is widely expected to be extended until the end of 2022.
How to receive the Superbonus
Resident tax payers can get up to 110% of the cost of certain renovations, paid to them in the form of tax credits. This will be divided into five equal annual tax reductions. However, there are two other options: credit transfer or invoice discount. In these cases, the Superbonus is credited towards the work directly through a reputable contractor or bank.
Basically, the credit for the ecobonus is “sold” and transferred to a financial intermediary (e.g. a bank) or to the contractor who is doing the work. If you transfer the tax credit to a financial institution, they then lend you the money to do the work. When transferring the tax credit directly to the contractor they will discount the amount on the invoice. They in turn will recover the money from their tax declaration.
Sounds too good to be true!
It sounds great. However, it is important to understand that the contractors, banks and insurance companies are not obligated to agree to buy your tax credit, and it’s likely to come at a cost.
On the other hand, the credit is for 110% of the cost so you have 10% plus the vat rebate to work with. This option will also open the market to create a pool of well-established contractors and banks that will compete to get this valuable new business.
What kind of building can the SuperBonus be applied to?
The types of buildings are varied and include: condominiums, detached houses and terraced houses. It can also be used on second homes.
‘Luxury’ homes excluded
You cannot use the Eco Bonus for buildings classed as A1 (Luxury), A8 (Prestigious Villa) or A9 (Castles, etc.). Buildings with these Cadastral Categories are not included in this law.
How to qualify
To qualify for the 110% Superbonus the work should improve the building by at least two energy classes. If this is not possible, the highest achievable energy class must be reached and demonstrated by two specific energy performance certificates, produced before and after the work is carried out. Only the listed renovation works qualify and there is a spending limit for each intervention.
Work included in the 110% Superbonus:
- 110% ecobonus is for the thermal insulation of vertical and horizontal building surfaces (so-called thermal coat) for at least 25% of its gross surface. This involves the application of insulating material on the external walls of the building.
- 110% ecobonus for the replacement of winter heating systems with a heat pump or condensing system, micro-generation plants or solar collectors for the production of hot water. The heat pump system consists of a compressor powered by electricity which pumps energy from a lower temperature environment to a higher temperature environment. Therefore, it can exploit the power of photovoltaic panels. It can be used for heating and cooling your home.
- 110% Sismabonus for reduction of seismic risk on the building. This must improve the rating by at least one class.
In addition to the main jobs listed above, the Superbonus also includes costs for other work performed together with at least one of the above. These include:
- energy efficiency measures
- installation of photovoltaic solar systems
- infrastructure for charging electric vehicles
Replacement of frames, shutters, awnings, air conditioning or windows are covered by the old ecobonus with a deduction of 50% to 65%. The good news is that the deduction increases to 110% if this work is carried out in conjunction with at least one of the driving interventions.
- You will need a technical report stating that the works comply with building laws, and that the required energy savings are possible. This must be completed by a Surveyor, Architect or Engineer.
- You must have the works certified with an accounting validation certificate. This will need to be done by an accountant or Commercialista.
- In regard to anti-seismic regulation (earthquake proofing), the certificate must be issued by the Surveyor confirming compliance to seismic regulations.
- A copy of the documentation has to be sent to ENEA (National Agency for New Technology, Energy and Economic Development) as well has the Revenue Agency.
The 110% Eco Bonus can provide significant savings. However, the application and procedure must be followed very carefully to avoid any problems, especially if you are trying to encourage a bank to buy the credit and fund the work.
We highly recommend that you have a renovation contract that is drafted by a property lawyer. The contract between the owner and the contractor should regulate the execution of the work and prevent any disputes. The contract also needs to regulate the payment of instalments for the work being carried out.
For further details see the official pdf guide issued by the Italian Revenue Agency (in Italian) “L’Agienzia Entrate” Superbonus 110%.