In this article, we want to clarify the differences between the Facade Bonus and the recent Relaunch Decree (Legislative Decree No. 34 of May 19, 2020), as many people still confuse its content and scope.
There is a substantial difference between the Facade Bonus and the Relaunch Decree.
What is the condominium facade bonus?
The facade bonus is a tax relief to boost the improvement or restoration of existing buildings, consisting of a 90% deduction.
The bonus applies to the exterior facades of buildings belonging to any cadastral category, located in Zones A and B, as defined by Ministerial Decree No. 1444/1968. Work on the opaque structures of the facade is permitted, including cleaning or painting only, but any work on the interior of the facade is excluded.
Zones A and B: what are they?
We can summarize the concepts detailed in the Official Gazette as follows:
Zone A identifies the historic center and surrounding areas; these therefore include agglomerations of historical, artistic, and environmental significance, including adjacent areas that can be considered part of this system;
Zone B identifies areas of land that are partially or fully built-up; that is, these are areas in which the covered surface area of existing buildings is no less than 12.5% (1/8) of the area’s land area and in which the density exceeds 1.5 cubic meters/sq m.
To oversimplify: essentially, dwellings located in urban expansion areas, such as isolated country houses, are excluded from this definition.
Who can benefit from the facade bonus?
The Revenue Agency reports that all taxpayers, both resident and non-resident in Italy, subject to IRPEF and IRES, who own the property undergoing renovations in any capacity, are eligible for the relief.
Therefore, anyone who owns a property as an owner, bare owner, or as a holder of a residence, use, usufruct, or surface area can benefit from it. However, anyone who owns the property as a tenant, i.e., a holder of a rental or loan agreement, duly registered, and in possession of the owner’s consent to the work, can also benefit.
What is the maximum threshold granted by the facade bonus?
There is no maximum deduction threshold to meet. The deduction will then be divided into 10 equal annual installments.
Deductible works and expenses related to facade interventions:
Exterior cleaning or painting;
Balconies, friezes, and ornaments, even if only cleaned or painted;
Opaque, thermally impacting structures that account for at least 10% of the gross heat-dissipating surface area of the building concerned;
Purchase of materials;
Replacement or repair of gutters or downspouts;
Design and various services related to the work;
Inspections and appraisals;
Issuance of Energy Performance Certificates (EPCs);
Scaffolding;
Disposal;
Public land use tax;
Non-deductible works with the facade bonus:
- Replacement of window frames, grilles, gates, doors, and windows;
- Renovation of the roof or a flat roof.
What requirements are required to access the facade bonus?
The person in charge (one of the condominium owners or, more often, the condominium administrator) must provide the data of the prefabricated building, then issues a certification of the condominium expenses paid and certifies that all legal obligations have been fulfilled.
What post-surgery procedures are necessary?
If the project involves energy efficiency measures, the notification must be sent electronically to ENEA within 90 days of completion of the work.
The tax deduction section must list the building’s identification data, who incurred the costs, the type of work performed, the annual energy savings resulting from the work, and the cost of the work (including professional fees, which are also deductible).
What documents should I keep?
It’s always a good idea to retain all documentation relating to payments, including bank transfer receipts, invoices proving actual expenses incurred, land registry applications for unregistered spaces, and resolutions and work permits. For energy-related work, it’s also a good idea to retain the APE certificate and the certified statement from the qualified technician.
Relaunch Decree (also called Ecobonus 110%)
It is possible to deduct 110% of the cost of the intervention over 5 years.
Who is included in the Relaunch Decree
Tutti gli interventi sulle prime case che mirano al recupero energetico dell’edificio.
An improvement in energy performance (of at least two classes) is mandatory, with a maximum deduction of €60,000 per unit for interventions related to opaque surfaces; in addition, a maximum deduction of €30,000 for interventions related to the replacement of heating, cooling, and domestic hot water systems in favor of new centralized Class A systems.
Therefore, if, for example, a €60,000 + €30,000 intervention were carried out, an individual (ordinary person) would be required to deduct this amount from their personal income tax (IRPEF) (for the five years following the intervention). This makes the possibility of transferring the tax credit to credit institutions and other financial intermediaries crucial.
Considerations
Clearly, it becomes difficult (though not impossible) to upgrade two classes with just the façade…this is because the intention is for energy efficiency to affect the entire building system, through integrated design that will involve many aspects of the building, with various areas subject to different deductions.
What is not known
- It is not yet known which “ancillary expenses” could be eligible for the 110% tax deduction.
- The requirements for insulation materials (Minimum Environmental Criteria) with a certain level of energy efficiency and the possibility of recycling the materials themselves are not yet known.
The real novelty is the possibility of credit transfer…
How can this be done today?
Today, an energy retrofit project (including facades) in any area (not just Z.T.O. A and B) is potentially tax deductible at 65% (or 50%) if it demonstrates an actual improvement in energy performance.
Article by Andrea Zuccher, architect in Verona and owner of the architecture firm Inside Project.