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When can the self-employed be deducted for investments in energy efficiency works

In the latest issue of the Declaring Legal Observatory, the self-employed group is summarized in the new approved measures with which it is sought to encourage energy efficiency that arise from Royal Decree-Law 19/2021, of October 5, which has modified the Income tax law to introduce new temporary deductions in the full state quota.

Last year they introduced three new deductions that are applicable on the amounts invested in rehabilitation works that contribute to achieving certain improvements in the energy efficiency of the habitual or rented home and in residential buildings, accredited through the energy efficiency certificate”emphasizes Marta Zaragozá, co-founder and CEO of Declarando.

Zaragozá also recalls that, of the three new deductions, the self-employed can only apply one of them, since they are incompatible with each other: “In the event that a self-employed person meets the requirements to opt for several of them, they will have to select the one that is most convenient, but only one”nuance

The three new deductions

1. Deduction for improvement works for the reduction of heating and cooling demand

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Those self-employed who have invested in works of this type between October 6, 2021 and December 31, 2022, may deduct 20% of the amounts paid to improve energy efficiency. The deduction will be applied when, with the finished installation, an energy saving of 7% has been obtained, a percentage that must be accredited by the energy efficiency certificates issued before and after the works.

The deduction is applicable to the taxpayer’s habitual residence and to any other dwelling owned and leased for use as a dwelling at that time. Likewise, if the property is expected to be rented, it will also apply if the property is rented before December 31, 2023.

It is important to remember that the self-employed who carry out their activity at home will only be able to deduct the part of the home in which their economic activity is not carried out.

2. Deduction for improvement works that reduce the consumption of non-renewable primary energy

This is a measure aimed at self-employed owners who have carried out thermal insulation works in their main residence and those who have it leased for use as a home or in expectation of rent.

The work must reduce at least 30% the non-renewable primary energy consumption indicator, or get an improvement in the energy rating of the home to obtain class «A» or «B». In this case, the maximum annual base to be deducted will be €7,500 —both in individual and joint taxation— and the applicable deduction percentage on the deduction base is 40%.

As in the previous case, it applies to works carried out from October 6, 2021 to December 31, 2022 and the parts of the dwelling intended for the activity of the self-employed are excluded; parking spaces, storage rooms, gardens, parks, swimming pools and sports facilities and other similar elements; and second homes that are not rented.

This deduction is also not applicable to new-build homes.

3. Deduction for energy rehabilitation works of predominantly residential buildings

The self-employed owners of the homes in which works have been carried out by which an improvement in the energy efficiency of the building is obtained, 60% of the amounts paid during the period of the works may be deducted, with a maximum annual base of this deduction of €5,000 per year.

It is important to bear in mind that the works referred to must be carried out on the whole building (single-family home) or on a complete block (multi-family building).

As was the case with the previous measures, the deduction will not be applicable to the part of the home that is affected by the economic activity of the self-employed person and the works will have had to be carried out between October 6, 2021 and December 31, 2023

In this case, the deduction will be made in the tax periods 2021, 2022 and 2023, in relation to the amounts paid in each of them, provided that it had been issued, before the end of the tax period in which it is going to be made. the deduction, the certificate of energy efficiency.

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