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Property in Spain: the home improvements you can get a 60 percent tax deduction for

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Property in Spain: the home improvements you can get a 60 percent tax deduction for
You can get a 20 percent income tax deduction, up to €5,000 per house per year, for installing energy efficient insulation in your Spanish property. Photo: RachelW1/Pixabay

Spain's government has extended until 2024 the offer of getting a tax deduction of up to 60 percent for energy-efficient renovations to your home. Here's how the plan works and some home improvement ideas that could help you benefit.


In 2021, as part of Spain's ‘Recovery, Transformation and Resilience Plan’, the Spanish government announced the possibility of deducting up to 60 percent of income tax for home renovations with improved energy efficiency. 

It took a long time to get the ball rolling but on Thursday June 16th 2022, the plan was finally put into motion, as Spain's Official State Bulletin (BOE) set out all the rules and regulations.

The EU Recovery Plan initially allocated €6.82 billion to housing, with a special emphasis on designs to improve energy efficiency. It will be up to each region how they manage the amounts.

These IRPF deductions have now been extended until the end of 2024. This is partly due to the fact that increased material costs due to high inflation has meant that the funds available have not been fully utilised.


How does the plan work?

The plan establishes three types of deductions, two designed for private homes and another designed for residential buildings as a whole.

The document indicates that there will be a 20 percent deduction, up to €5,000 per house per year, for undertaking certain works that reduce the demand for heating and cooling in the home by at least seven percent. 

The deduction may be made in the tax period in which the energy certificate is issued.

In addition, a 40 percent deduction will be allowed for reducing non-renewable primary energy consumption by 30 percent, up to €7,500 per year. As in the previous case, it is again necessary to have an energy certificate that validates the work.

Finally, a 60 percent deduction, with a maximum of €15,000 will be available for the completion of rehabilitation works of entire buildings, by reducing the demand for non-renewable primary energy by at least 30 percent, or by improving the energy rating of the property to an 'A' or 'B'.

The three deductions are incompatible with each other if you are trying to apply them to the same work carried out. They are compatible for private homes, if they are separate works. 

Personal income tax and VAT

For the time being, these public benefits are exempt from personal income tax or IRFP. This is the first time such subsidies have been released from income tax, a decision by the government to encourage rehabilitation.

With regard to VAT, in order to be eligible for the reduced rate, it is necessary that the cost of the main works be more than 25 percent of the cost of your home.

This is in addition to the government's Housing Plan, which it launched in 2018 and which is still in place in 2023. The Housing Plan gives grants for essential home improvements of up to €12,000 for issues such as conservation, safety and access, as well as energy efficiency of the home and urban renovation.

READ ALSO - EXPLAINED: How foreigners in Spain can get grants for home improvements


Here are several home improvement ideas you can do in order to improve the energy efficiency of your home and benefit from these tax reductions.

Install energy-efficient double glazing
Windows are one of the most important elements when it comes to securing the energy efficiency of your home. Therefore, it is very important to make sure they are insulated correctly and have good thermal transmittance. Sto Ibérica, a company that deals with energy-efficient renovations, recommends installing double glazing with an air chamber of at least 10 mm to maximise energy efficiency.

Install thermal insulation
Thermal insulation can be installed in the walls, floors, and ceilings of your property to improve the overall energy efficiency, keeping it warm in winter and helping it to stay cool in summer. Insulation can be added to the façade of the building, although to make it more energy efficient, an interior thermal insulation system should be installed.

Control the amount of sunlight
It’s essential to control the amount of direct sunlight that enters your home and change it according to the seasons. You want to allow lots of direct sunlight in winter to help heat up your home, so you don’t use so much heating and you want to direct it away from your home in summer, so you don’t use the air-conditioner or fans so much. estimates that the overall energy savings from installing high-performance technologies and daylight controls are as high as 75 percent. These could include things such as smart blinds, sunshades and awnings.


READ ALSO: Do I need planning permission in Spain and how do I apply for it?

Eliminate drafts
It’s important to identify and repair any air leaks or drafts in your property by sealing the gaps between the doors and windows and the walls. With these measures, it will be possible to save up to 50 percent on the consumption of air conditioning in the home, according to Sto Ibérica.

Improve ventilation systems
While you want to eliminate drafts and air leaks, it’s also important that your property is well ventilated to avoid too much humidity or dampness and to help it cool down in the summer. Natural ventilation is important, but Eco Home Essentials also suggests installing the option of a controlled ventilation system to maintain good air quality in your home when the outside air is not so favourable. This will also help improve efficiency.   

Install efficient air conditioning and heating
In general, installing air conditioning units add to climate change issues, but if you have an old or inefficient unit, then it’s definitely worth exchanging it for a new one. According to the Alliance to Save Energy, air conditioning systems account for 40 to 50 percent of the energy consumed in a home. For this reason, it is best to buy the most energy-efficient option. In terms of heating, there are several energy-efficient options, from condensing boilers to low-temperature radiators, underfloor heating, and smart thermostats.

READ ALSO: How much does it cost to have air conditioning at home in Spain?


Implementation of automation systems
Home automation allows the intelligent management of the home to be controlled and automated. Not only does this provide greater comfort and security, but it also helps to efficiently manage the use of water, electricity, and fuel, making better use of resources and using the lowest cost hourly rates.

Use renewable energies
Along with the above improvements, one of the best things you can do is to use renewable energies, such as installing solar panels; getting a biomass boiler, which uses natural fuel; and using LED light bulbs. As well as this, you can make sure your electrical appliances have a low consumption energy label. 

For more information on how to undertake this type of project, the Institute for the Diversification and Saving of Energy (IDEA), along with the Higher Council of Architects of Spain (CSCAE), has prepared a guide that focuses on the optimisation of energy efficiency when renovating buildings. 


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