The 411 on Italy’s Ecobonus: A Short Guide

The buzz word on the street right now in Italy and especially amongst the potential buyers looking to renovate their dream home, is the “Ecobonus”.

As of the 16th July the “Decreto Legge” was confirmed that the Ecobonus will be extended until the end of 2022. 

So what is the Ecobonus exactly, and how can this benefit you and above all what do you need to look out for? Here is a general overview but it is prudent to obtain specific advice from a trusted specialist in this area; i.e. a qualified accountant who will be able to give more precise figures on the regime and what are the requirements to be considered eligible. Please note that certain details of the Ecobonus are NOT final and specialist advice on this subject will need to be sought. 

The Ecobonus is a regime that has been brought in by the Italian government to re-inject some cash flow into the construction and real estate industries here in Italy.

It is a special incentive that entitles the owner to obtain a tax reduction on renovation works but Italy being Italy, there are quite a few variables to consider. 

What does the Ecobonus entail?

In lamens terms the 110% ecobonus or “renovation” bonus is a tax deduction of 110% of the expenses incurred related to improving energy efficiency ratings and or seismic risk reduction. The bonus is valid for expenses incurred from 1st July 2020 until end of 2022. The 110% deduction can be recouped in 5 equal annual instalments or there are two other options which are a credit transfer or invoice discount. 

What works can claim the 110% ecobonus?

Works that compromise thermal insulation and replacement of boilers with centralized condensing systems are deductible should the costs be incurred in the time frame between 1st July 2020 to the end of 2022. 

All works must achieve an improvement in 2 classes of energy ratings to qualify for the ecobonus. 

What types of properties are exempt from the 110% ecobonus? 

Real estate units belonging to the following cadastral categories listed below are excluded from the new tax breaks: 

A/1 : Stately homes
A/1 : 8 houses in villas
A/9 : castles, palaces of eminent historical or artistic merits 

Under the latest amendment to the legislation, second homes are also included in the regime so this could be a very enticing regime for those looking to purchase a second home in Italy. 

What types of properties qualify for the Ecobonus?

Condominium apartments
Low cost homes (IACP - Istituto Autonomo Case Popolari)
One & two family villas (Ville monofamiliare e bifamiliare)
Second homes
Detached homes

Who can benefit from the Ecobonus?

People who are tax paying residents in Italy, can benefit from using the relief of the Ecobonus to offset against the costs involved with approved renovations. 

However, please note that it is recommended to seek specialist advice from your accountant before proceeding with any works, to get the precise idea of what you can and can’t claim relief for. 

Happy house hunting!!