Overview of the tax benefit
Since 1.1.2020, the state has been subsidising energy-related building measures for owner-occupied residential properties via a tax benefit. This is applicable for building measures started after 31.12.2019 and completed before 1.1.2030. Furthermore, the property has to be older than 10 years when the measures are carried out. Unlike in the case of household-related services and building and construction services under Section 35a EStG, the subsidy covers not only labour costs but also material costs.
The tax benefit includes the following building measures:
- The thermal insulation of walls, roof areas and storey ceilings
- The renovation of windows, exterior doors and heating systems
- The renovation or installation of a ventilation system
- The installation of digital systems for the optimisation of energy operation and consumption
- The optimisation of heating systems that are older than two years
Level of funding
There is a maximum amount of € 40,000 in tax relief available for each property. Here, the EStG provides for the following staggered scheduling:
|Assessment period||What is deductible||Max. amount of tax relief|
|Year in which building measure completed||7% of expenses||€ 14,000|
|1st subsequent year||7% of expenses||€ 14,000|
|2nd subsequent year||6% of expenses||€ 12,000|
A condition for the funding is, first of all, that the building measure has to be carried out by an approved specialist company while taking into account the minimum energy-related requirements. An invoice has to be issued for the work that shows the measures eligible for tax concessions, the work performed and the address of the qualifying property. Furthermore, the invoiced amount has to be paid into the service provider’s bank account (no cash payments). The ordering party who would like to claim the tax benefit in his/her tax return, moreover, has to submit to the local tax office a certificate, based on the officially prescribed model, from the specialist company about the building measure.
Work on rental properties is excluded from the funding programme because solely the taxpayer him/herself has to have been living in the property in the respective calendar year. However, the applicable expenses can be deducted as related costs by private landlords from their income from letting and leasing.
Please note: If energy-related measures are carried nout at a multi-party apartment building then a certificate basically has to be issued for each individual residential unit. There is an exception if the refurbishment expense applies to the entire building.
The Federal Ministry of Finance published the appropriate model certificate in its circular from 31.3.2020 (case reference: IV C 1 – S 2296-c/20/10003 :001). This specifies the content, structure and order of the information from which the building and construction service company may not deviate. In addition, the issuers may also send the certificates in electronic form to the ordering parties.