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What is the Superbonus and how to benefit from it, even if you don’t pay Italian income tax

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What is the Superbonus and how to benefit from it, even if you don’t pay Italian income tax

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It’s recent news the Superbonus 110% has been recently extended to 2023, and this is great if you intend to renovate your home. Superbonus 110% isn’t the only available tax break on house renovations; find out how you can save on your taxes whilst renovating your Italian home.

Who can benefit of the Superbonus and the other tax breaks?

In this article we focus on the house related tax breaks of Italy. In order to benefit of such tax breaks you only need to have a right of property or possession of any residential unit in Italy. You don’t need to generate any income, nor pay any tax to Italy, you only need to have any of the following rights on your property:

  • Ownership;
  • Usufruct;
  • Rental;
  • Comodato d’uso.

If you hold any of the rights above, you can renovate your property using the tax breaks available. Furthermore, there are no limitation on your citizenship to apply for such programs.

Let’s find out how to technically benefit of such breaks.

How to benefit of the Superbonus and the other home improvement tax breaks?

Until 2020, the only way to benefit of such breaks was to claim them against your tax bill, in case you don’t have any income to Italy, or your income sources are taxed at substitute tax rates, waiving any tax credit against it; your tax deductible expenditure would be wasted.
In case you pay IRPEF tax, you can claim the expenditure against it, and this is spread throughout 5 or 10 tax years. Note that if the tax credit exceeds the tax payable, the excess is wasted.

From 2020, it is also possible to trade the tax credit directly to your contractor/supplier, thus benefiting of the so called “sconto in fattura” or to trade it for cash to an Italian financial institution. Albeit anyone can actually purchase your tax credit, financial institutions are specialized in this.
In both cases, you need an accountant’s sworn statement named “visto di conformità” which basically assesses the tax credit conformity to the law, and it explicitly states the total amount claimable against tax.

Once you obtain the Visto di conformità, you can trade your tax credit to your contractor or to your bank. In the latter case you will receive cash back directly on your bank account; in any case you must check the tax credit payout terms and conditions prior agreeing to the tax credit sale.
Finally, you can transfer your credit to your counterpart via your Cassetto Fiscale, or you can delegate a tax accountant to do so on your behalf.

Superbonus 110% - how does that work?

The Superbonus 110% has been recently extended to December 31st 2023. Qualifying seismic renovations and energy efficiency improvements attract a tax credit amounting to 110% of the qualifying expenses.
You can offset your tax credit against your tax liability in 5 equal instalments, or alternatively you can sell it to a financial institution.

Let’s check out how the Superbonus 110% scheme works and which type of renovations qualify for the tax credit.

Superbonus 110% - Seismic improvements

Italy is known for its Earthquakes, and from time to time certain areas of Italy are hit by seismic events which can be catastrophic for the human toll and the economic losses. Since 2017, the Italian government has introduced tax breaks for Seismic improvements expenses on buildings, in an attempt to mitigate the risks and losses incurred in such events.

Firstly, Italy classifies its municipalities in 4 seismic risk categories, where 4 represents the safest category, whilst 1 is the highest seismic risk in Italy.
This tax scheme is applicable only to residential properties (excluding luxury ones identified in the cadastrale categories of A/1 – A/8 – A/9) located in municipalities where the seismic risk is at least 3.
The property owner can be either a natural person or a limited company.

The maximum allowable expenditure is € 96,000 per house unit, including garages and basement. This amount applies for the whole tax year, therefore you cannot make more than one improvement per year.
For example, if you have a house unit and a garage, and you decide to make a new roof or strengthen the pillars, your total expenditure is € 192,000.

In order to lock in the Superbonus, you only need to improve the current seismic responsiveness of your building; the law does not provide any guidance or constraint regarding the type of improvements required.The seismic improvement has to be sworn by a certified engineer.

Note that the Superbonus compliance adds up to the regular house renovation/restoration compliance, where the project needs to be drafted by a certified engineer, the project must be approved by the local council, and the building needs to have the cadastral conformity.
I cannot stress enough the importance of working with a reliable engineer who knows the local rules, as well as the Superbonus scheme.

Superbonus 110% - Energy efficiency improvements

Italy already introduced the Ecobonus 65% scheme back in 2012 in an attempt to improve the Energy efficiency of the Residential and non residential units in Italy, as well as reduced the fossil fuels and natural gas consumptions.

The Superbonus 110% for energy efficiency improvements is structured on the basis of primary and secondary improvements (“trainante” and “trainato“), providing different expenditure caps based on the home type (single family unit, mini condominium, condominium with 8 or more units).

In order to trigger the 110% scheme, you must perform at least one primary improvement and the resulting improvements must increase the building’s energy efficiency class of at least two categories. Failure to meet any of the two criteria jeopardizes the schemes applicability.
You are therefore required to assess the building’s current energy efficiency class; you must also bear in mind that the Superbonus 110% is not applicable to those home units which do not have a current existing heating system (a fireplace is enough).

Let’s find out what type of improvements qualify for the Superbonus 110%

Superbonus 110% - Primary improvements

The following improvements qualify for the 110% Superbonus:

  • External coating;
  • Heating system replacement.

The Seismic improvements also qualify as primary improvement, allowing the secondary improvements to be uplifted to 110% as well.

The qualifying expenditure for the external coating is € 50,000 per house unit, which is reduced to € 40,000 for condominiums up to 8 units; condominiums with 8 units or more attract a maximum expenditure of € 30,000 per house unit.

If you replace the existing heating system, you can spend up to € 30,000 for a single unit home, reduced to € 20,000 for houses up to 8 units, further reduced to € 15,000 for condominiums with 8 units or more. Note that the cap is applicable to each house unit, thus a condominium with 10 units can spend up to € 150,000 on centralized heating system replacement.

Superbonus 110% - Secondary improvements

Once you perform any of the primary improvements, you can trigger the 110% Superbonus on the following expenses:

  • Windows replacement;
  • Solar panels and batteries;
  • E-vehicle charging stations
  • Building automation.

The windows replacement is calculated on € 750 per square meter (reduced to € 650 for warmer areas), and in any case it cannot exceed € 54.545.

Solar panels are capped at € 2,400 per kW, up to € 48,000 while the batteries attract a maximum expenditure of € 1,000 per kW, up to € 48,000.

Finally, E-vehicle charging stations are capped at € 2,000.

90% Facade bonus

If you wandered through any Italian city or town, I am sure you witnessed several buildings needing major restorations, especially regarding the facade which sometimes might look in ruins.

The Italian government has introduced a 90% tax break (with no expenditure cap!) on facade renovations and improvements.In order to qualify, the building must be located in town centres or populated areas, single homes outside of towns are automatically disqualified; furthermore, the facade needs to be visible from a public road. Balconies are also considered part of the facade itself.
Internal facades therefore do not attract any tax relief.

The 90% facade bonus also includes the external coating systems, and in this case it is necessary to communicate to ENEA the type of external coating and the energy savings.
You can write off the 90% facade bonus in 10 equal instalments in your tax return, alternatively you can trade it to a financial institution.

70-85% Seismic improvements

Since 2017 seismic improvements qualify for a minimum 70% tax credit on the qualifying expenditure.

Albeit the 110% Superbonus on seismic improvements is more attractive, you can also claim this type of bonus. Unlike the 110% you need to increase the building’s seismic responsiveness of at least one category to secure the 70% tax credit, increased to 80% in case of two categories improvement. There is an extra 5% tax credit if the house is located within a condominium.

65% Ecobonus

Since 2012 the following expenses qualify for the Ecobonus:

  • Heating system replacement;
  • Building’s external coating;
  • Windows replacement;
  • Condensing boiler replacement;
  • Heat pumps;
  • Water boiler replacement;
  • Micro generators;
  • Hybrid heating systems;
  • General building’s improvements;
  • Solar collectors.

Unlike the Superbonus, this scheme applies to various buildings, including stores, offices, shops, hotels, and other hospitality buildings on top of residential units. This list is basically identical to the primary and secondary Superbonus improvements, and you may ask yourself, why would you claim the 65% bonus if you can actually claim the more beneficial 110%?

Sometimes you may not access to the 110% Superbonus, especially if you can’t improve the building’s energy efficiency of at least two categories.

Each expenditure has its own cap ranging from € 30,000 up to € 100,000 on general building’s improvements.

50% General House renovation scheme

Private homes can qualify for a general 50% house renovation scheme. This includes any ordinary or extraordinary house maintenance, including the condominium improvements on common areas.

This scheme provides a cap of € 96,000 per house unit, and the qualifying expenditure can be offset against your tax bill in 10 equal instalments; it is possible to trade this to a bank or any other financial institutions.

Note that if you are performing a Superbonus altogether the General house renovation, the € 96,000 expenditure cap refers to BOTHthe schemes, therefore they don’t add up one to the other.

50% Furniture bonus

If you purchase furniture or A+ home appliances up to € 16,000 you can claim 50% of the expense against your tax bill. According to the law any house furniture (including internal doors) qualifies for the relief, whilst appliances must be eco-friendly with class A+.
In order to trigger this bonus mobili, you need to undertake a house renovation first.
You are required to pay the supplier via bank wire, debit or credit card; cash payments automatically disqualify you

Unlike other bonuses, you cannot trade this credit, thus allowing you to claim it only against your tax bill in 10 equal instalments.

36% Garden bonus

The Italian tax law includes the 36% Bonus verde, aimed at improving private gardens. Qualifying expenditure is capped at € 5,000 per house unit, and it is only claimable against IRPEF, thus disqualifying limited companies from this benefit.
It is imperative to pay the expenses via bank wire, or any other traceable payment form.

Unlike other bonuses, you cannot trade this credit, thus allowing you to claim it only against your tax bill in 10 equal instalments.

House tax relief conclusions

This article provides a thorough explanation of the currently available tax breaks. It is crucial to liaise with your accountant, and the professionals involved in the renovations (engineers, architects, thermic engineers etc.) to discover how to make the most out of the available tax credits.

Accounting Bolla can help you assessing your planned renovations, as well as support you in the tax credit sale. We are also able to buy your tax credit for outright cash. Drop us a line, and we will be in touch shortly

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