Home Renovation Tax Deductions: Go Green and Save on Taxes

home renovation tax deductions
Explore the home renovation tax deductions in Spain. Learn how to get up to a 60% tax break on energy efficiency improvements.

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Improving your home’s energy efficiency not only contributes to the environment and your comfort but can also help you pay less in taxes. The home renovation tax deductions for energy efficiency allow you to recover a portion of your investment by directly reducing your tax bill on your IRPF tax return.

What Are the Home Renovation Tax Deductions?

These home renovation tax deductions are a temporary incentive approved as part of the Recovery, Transformation, and Resilience Plan in Spain. They apply to IRPF and allow you to deduct between 20% and 60% of the amounts invested in home improvement works aimed at increasing energy efficiency in your main residence or a property rented for residential use, provided all official requirements are met.

Types of Works That Qualify

There are three different deductions based on the type of work and the energy savings achieved:

  1. 7% Reduction in Heating and Cooling Demand:
    • 20% deduction on a maximum base of €5,000 annually.
    • Typical works: changing windows, insulating roofs or facades.
  2. 30% Reduction in Non-Renewable Primary Energy Consumption (or an upgrade to an A or B energy rating):
    • 40% deduction on a maximum base of €7,500.
    • Applicable to comprehensive renovations of heating, air conditioning, or electrical systems.
  3. Energy Rehabilitation in Entire Residential Buildings:
    • 60% deduction on up to €5,000 per owner, for work done within homeowners’ associations.
    • This applies to collective projects that achieve a 30% reduction in energy consumption or an upgrade to an A or B rating.

Integrated example: If you install double-glazed windows and your home’s thermal demand is reduced by 10%, you could apply the 20% deduction on the cost, up to a maximum of €1,000 for a €5,000 investment.

Requirements to Apply the Home Renovation Tax Deductions

To benefit from these deductions, you must meet the following criteria:

  • The property must be your main residence or rented for residential use (not for tourism).
  • The work must be carried out between October 6, 2021, and December 31, 2024 (extended to 2025 for building rehabilitations).
  • The post-renovation energy performance certificate must be issued before January 1, 2025 (or 2026 for buildings).
  • You must justify the improvement with official energy performance certificates, issued by a qualified technician before and after the work.
  • Payment must be made through traceable means (bank transfer, card, or bank deposit)—not cash—and the work must be done in Spain.

How to Justify the Deduction to the Tax Agency

It is essential to keep the following documentation:

  • Official energy performance certificates (before and after the work).
  • Detailed invoices and bank payment receipts.
  • Contract with the installation or renovation company.
  • For community projects: the approval act from the homeowners’ association and a certificate of your proportional share.

How to Include the Deduction in Your Tax Return

In the Renta Web service, you can:

The deduction is applied in the tax year in which the post-renovation certificate is issued. Note that if the expense exceeds the maximum deductible amount, the excess cannot be carried over to subsequent tax years.

Frequently Asked Questions (FAQs)

Can I apply the deduction if the property is rented out? 

Yes, as long as it is a residential rental and you can justify the work with valid certificates and bank payments. The application period extends to 2025, provided it is rented out before December 31 of that year.

Can I apply more than one energy efficiency deduction in the same year? 

Yes, as long as they correspond to different types of work (e.g., thermal demand and non-renewable energy consumption) and do not exceed the limits set for each deduction.

What happens if I don’t get the post-renovation energy certificate? 

Without the post-renovation certificate, you cannot prove the required energy improvement, and therefore, you will not be able to apply the deduction.

The home renovation tax deductions are an excellent opportunity to renovate your home with sustainable criteria and save on your tax return. If you’re considering installing solar panels, improving insulation, or changing your HVAC systems before December 31, 2024/2025, you can get a double reward: improved comfort and optimised taxes. With the right documentation and good advice, you can achieve a real economic and ecological benefit.

If you need personalized assistance, at Entre Trámites we offer management and tax advisory services for freelancers and SMEs. You can contact us through this contact form for us to call you, or if you prefer, you can schedule a free consultation or write to us on WhatsApp.

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