Renovation and 50% Tax Deduction: who Can Apply and What Documents are Required

The Renovation Bonus, namely the 50% tax deduction for building renovations, has been confirmed and extended over the years with various modifications. Recently, other tax incentives for renovations have also been introduced, often creating some confusion for non-professionals, especially regarding the bureaucratic requirements necessary to obtain the 50% Renovation Bonus. The regulations are indeed constantly evolving. Let us examine together, as of today, who can apply for the 50% tax deduction for renovation and what documents are required for this purpose.

Who is Entitled to the 50% Renovation Bonus

Not only owners or holders of real rights on the property to be renovated can apply for the 50% deduction, but also tenants or borrowers. The following are entitled to this deduction:

• The owner or bare owner;
• The holder of a real right of enjoyment such as use, usufruct, habitation or surface rights;
• The borrower or tenant;
• Partners of simple partnerships;
• Partners of divided and undivided cooperatives;
• Individual entrepreneurs, if the property to be renovated is not among those instrumental or merchandise.
  Furthermore, if they bear the expenses and are the holders of bank transfers and invoices, the following can also access the deduction:
• Cohabiting family members of the possessor or holder of the property to be renovated, spouses, relatives within the third degree or members of a civil union;
• Separated spouses assigned the property registered to the other spouse;
• Cohabiting partners, not owners of the property to be renovated, nor holders of a loan agreement for expenses incurred from January 1, 2016.

The condition of cohabiting or borrower must exist at the time of sending the work commencement notification.
In these cases, while maintaining the other conditions, the deduction applies even if the municipal authorizations are registered to the property owner. Furthermore, the remaining quotas of the “bonus” are automatically transferred to those who purchase a property on which works benefiting from the deduction have been carried out. Those who perform work themselves are also entitled to the deduction, which will be calculated solely on the expenses for purchasing the materials used.

Documents Required by the Revenue Agency

According to the provision of the Director of the Revenue Agency dated November 2, 2011, those who wish to benefit from the tax incentive on 50% building renovations must keep and present the following documents:

1. Administrative authorizations required by current building regulations, or a substitute declaration of notarized act;
2. Payment receipts for municipal property tax, when due
3. The cadastral registration application for properties not yet registered
4. The possessor’s declaration of consent to the execution of works, when works are carried out by a property holder other than cohabiting family members
5. The assembly resolution approving the execution of works for interventions on common parts of residential buildings with a thousandths table for expense allocation
6. Where mandatory, the preventive communication to the Local Health Authority indicating the work start date.
7. Invoices and fiscal receipts detailing the expenses incurred;
8. Bank transfer payment receipts.

Furthermore, with the 2018 Budget Law the obligation to transmit to ENEA information relating to building heritage recovery works that implement energy savings and the use of renewable energy sources was introduced. In this case, it will also be necessary to keep documentation certifying the transmission of the ENEA communication.

ENEA Communication for the 50% Home Bonus

The communication to ENEA regarding the works carried out must only be made when these involve energy savings or the use of renewable sources, so it is not always necessary. The interventions that fall under this type of requirement belong to three different macro-categories:

• Building structures: interventions for reducing transmittance, namely thermal dispersions of walls, roofs, floors and slabs that delimit heated environments from the outside, from the ground and from cold spaces.
• Technological systems: interventions for the installation of solar thermal panels, heat pumps for environmental air conditioning, hybrid systems (heat pumps combined with compensation boilers), heat pump water heaters, biomass heat generators, microgenerators, thermoregulation and building automation systems, heat accounting systems in centralized plants, photovoltaic systems and storage systems,
• Fixtures: interventions aimed at reducing the building’s thermal dispersion through the installation and improvement of fixtures.

The ENEA communication must be sent electronically on the agency’s website within 90 days from the end of the works.

Administrative Authorizations for the 50% Renovation Bonus

To carry out renovation works, enabling titles such as SCIA or CILA are required. To apply for the 50% tax deduction, it is necessary to keep a copy of all documentation submitted and approved by the technical office of the relevant Municipality. If building regulations do not require the submission of these municipal practices, those who want to access the deduction must still sign a substitute declaration of notarized act that reports the work start date and certifies the interventions carried out.

ASL Communication

The communication to the ASL (Local Health Authority) is a document introduced by Legislative Decree April 9, 2008 n.81. According to article 99 of the Decree, sending the ASL communication is necessary when at least two companies are present on the construction site (even if not simultaneously), or when the renovation is entrusted to a single company whose presumed work entity exceeds 200 man-days. In this case, it is necessary to send a communication to the competent Local Health Authority by registered mail with return receipt or by other methods established by the Region. The document must include:

• The personal details of the work client,
• The location of the works
• The nature of the intervention
• The identifying data of the executing companies
• The work start date

Keep Speaking Bank Transfers

To obtain the 50% Renovation Bonus, it is essential that bank transfers are made directly by the person benefiting from the incentive, the same person to whom the invoices are addressed. It will be necessary to make speaking bank transfers, showing the payment reason and the tax codes of the payer and the tax code, or VAT number, of the payment beneficiary. When the expense is borne by multiple parties, the speaking bank transfer must include the tax code of all interested parties.

Losing the Deduction

The tax deduction is not recognized if:

• The works performed do not comply with the building and urban planning regulations of the property’s municipality;
• Payment was not made through bank or postal transfer;
• Invoices or receipts demonstrating the expenses incurred were not submitted;
• The bank transfer receipt is not presented, or it is addressed to a different name than the person requesting the deduction;
• Preventive communication to the ASL was not made, when mandatory;
• Violation of regulations regarding contributory obligations and workplace safety regulations occurred.

To best follow these practices while avoiding unnecessary risks, it is essential to rely on industry specialists. By choosing to renovate with Domidea, our team of expert tax consultants will follow all relevant practices in detail. To learn more, contact us immediately!