Building renovations and requalification: extension of the incentives with new rates
Tax deductions of 50% are currently applicable for renovation works. The bonus for energy upgrading has been extended to June 30th, but at 50% instead of the 55% previously applied. In fact, Italian Decree 83/2012 was published in the Official Gazette and contains urgent measures for national growth.
Let's take a closer look at the provisions in force:
The expenses borne between 26 June 2012, when the Decree for Development went into effect, and 30 June 2013 enjoy fiscal concessions at a rate of 50%, up to a maximum ceiling of 96,000 Euro.
The works subject to "renovation bonuses" are, for example: i) special maintenance operations aimed at restoration or conservative renovation and restructuring of individual building units — ordinary maintenance works are covered only if they are performed on all common parts of residential buildings; ii) works needed to rebuild or restore buildings damaged by calamities; iii) works designed to eliminate architectural barriers; iv) works aimed at preventing domestic accidents; v) works designed to prevent the risk of criminal acts.
Below is a brief, but by no means complete list of the works that are deductible:
■ installation of safety glass
■ installation or replacement of window grates, security or reinforced doors
■ application or replacement of doors, locks, latches, spyholes
■ installation of opening and break-in detectors on windows and doors
■ application of rolling shutters
■ metal roller shutters with locks
■ burglar-proof glass
■ replacement of outdoor windows and doors and blinds with rollers, with modification of the material or type of window/door
■ works designed to achieve energy savings
■ opening of windows to aerate the room
■ modification of façades
■ opening of new windows and doors
What happens for works already started?
Calculation of the detractions for building renovation works already started follows the cash flow principle This means that the bonus of 36% or 50% is applied, depending on the date on which payment was made. The Under-secretary of the Economics Ministry has recently issued clarification in response to questions posed by Parliament. Therefore, for the 2012 fiscal year, expenses borne prior to 25 June 2012 enjoy a detraction of 36%, with a ceiling of 48,000 Euro. On 26 June 2012, the new system goes into effect. All expenses paid after this date will receive a 50% detraction. The new global cost ceiling, referred to the cost of all renovation works, has been doubled and is now 96,000 Euro. The costs previously sustained — for which the concession was 36% — must then be detracted from this new total. In the 2013 fiscal year, a 50% detraction will be applied with a ceiling of 96,000 Euro for costs borne up to 30 June 2013.
Instead, the detraction of 55% for building energy redevelopment will remain in force until 31 December 2012.
As previously established in the “Save Italy” decree, designed to promote growth, this latest decree confirms that, starting on 1 January 2013, energy redevelopment works will be considered as equivalent to renovation works and thus the concessions granted for such works which be changed to 50% until 30 June 2013.
Finally, the text specifies that the ceilings for detraction shall remain unchanged.
After 30 June 2013, the situation automatically reverts back to the old standard. Those who do not hurry to get works done within this time will not be able to benefit from the increased detractions but, instead, will receive a reimbursement of 36% of the costs and the ceiling will once more drop to 48,000 Euro. As asserted in the response to the question, this could mean that, if the works continue after 30 June 2013 and the amount already spent exceeds 40,000 Euro, additional costs will not enjoy the benefits of any concessions.
V.A.T. ON WORKS TO RESTORE BUILDING ASSETS
The 2010 budget takes the arrangement that sets the VAT tax rate for both normal and special maintenance at 10% and makes it permanent. Nevertheless, renovation, conservative restoration and restructuring works are not affected since this reduced rate was already applied for such works. However, it must be stressed that there is a substantial difference between renovation, conservative restoration and reconstruction, on the one hand, and ordinary and special maintenance, on the other: the former can take advantage of the reduced VAT rate of 10% for both tendered or contracted services and for the supply of finished goods, with the exception of raw materials and parts supplied for construction of the works; the latter, instead, can enjoy the 10% VAT tax rate only for tendered or contracted services (and even this with some limitations when so-called major assets are involved) and not for the mere supply of goods, raw materials or parts.
READ THE ATTACHMENTS