What is the Tax Relief?
Italy’s recent Finance Law for 2020 extended the tax credit equal to 50% of a maximum of €10,000 of expenditure for furniture and household appliances in connection with buildings subject to renovation. The relief applies to expenditure during the course of 2020 for renovation that commences on or after 1 January 2019.
The previous relief applied to purchases made in 2019 where the renovation work started no earlier than 1 January 2018.
Note that the deduction is solely for the taxpayer who has applied for the benefit of the costs of building heritage restoration work.
So far example, if the costs of renovating the building are incurred by one spouse and those for furniture by the other, the bonus for the purchase of furniture and appliances is not available to either spouse.
In order to access the relief therefore, it is essential to carry out restructuring work (and benefit from the relevant tax credit for those works, both on individual building units.
The relief only applies to residential property.
Regardless of the amount of the costs incurred for the acquistipon of the purchase of furniture and large appliances, the 50% tax credit is calculated on a maximum amount of 10,000 euros. The deduction must be divided among the entitled parties in ten tranches annual of the same amount.
So if, during the course of 202o, you purchase new equipment paying Euro 20,000 then you will be entitled to a tax credit of Euro 5,000 spread over ten years – a Euro 500 reduction in your tax bill each year for ten years.
The relief applies to the purchase of:
New furniture e.g:
beds, wardrobes, dressers, bookcases, desks, tables, chairs, nightstands, sofas, armchairs, sideboards, mattresses, luminaires,
and household appliances e.g:
refrigerators, freezers, washing machines, washer-dryers and dryers, dishwashers, cooking appliances, electric stoves, microwave ovens, electric heating plates, electric heating appliances, electric radiators, fans electrical, air conditioning equipment.
Excluded from the relief are:
doors, flooring (e.g. parquet, curtains and drapes, other furnishings of energy class not lower than A+ (A or higher for the ovens and driers), as can be seen from the energy label
Unlabelled appliances can qualify, provided that energy certification labelling is not compulsory by law
Delivery and installation costs can also be included int eh amount available for the tax credit
Examples of Qualifying Renovation Works.
- installation of elevators and safety staircases
- bathroom installation
- replacement of external cladding and fittings involving a change in material or type of frame
- refurbishment of stairs and ramps
- construction of fences, boundary walls and gates
- construction of internal staircases
- replacement of internal partitions without altering the category of building
- work aimed at the use of renewable energy sources, for example the installation of a pellet stove or systems equipped with heat generators fuelled by combustible biomass
- the installation or upgrading of heat pump winter/summer air conditioning systems
- the replacement of the boiler, as part of works replacing an essential heating system component.
- facade modification
- construction of an attic or balcony
- transformation of roofspace into an attic or balcony into a veranda
- opening of new doors and windows
- construction of the toilets in expansion of the existing areas and volumes
- adjustment of the floor to ceiling heights in compliance with existing volume requirements
- restoration of the historical-architectural aspect of a building
Examples of routine maintenance work on common areas that give the right to the bonus:
- painting of walls and ceilings
- replacing floors
- replacement of external fixtures
- refurbishing of plasterwork
- roof tile replacement and waterproofing renovation
- repair or replacement of gates or doors
- gutter repair
- repairing the external walls.
For condominium work the tax credit is limited to furniture and appliances designed to be used in common areas, not inside individual homes.
Excluded from the relief are:
- works aimed at preventing the risk of third party criminal acts such as theft or vandalism (unless, due to their particular characteristics, they can be included as building maintenance
- the construction of parking spaces or external garages
Requirement for Transparent Payment
To get the tax credit the goods must be paid for by bank transfer or debit or credit card. You are not allowed to pay by bank cheque, cash or other means of payment.
Use of Tax Credit
As with any tax credit you need to have taxable income. So if your only income sources are taxed under, for example the flat rate tax regime, or substitute tax regime then you cannot access the credits.
How to get the bonus
The deduction is obtained by indicating the expenses incurred in the tax return (Model 730 or Form PF individual tax return).
From 1 January 2018, Enea must be notified of purchases of certain household appliances for which can take advantage of the bonus (ovens, refrigerators, dishwashers, electric hobs, washer-dryers, washing machines). All the information on sending the communication is available on Enea’s website. page http://www.acs.enea.it/ristrutturazioni-edilizie/. Missed or late transmission
does not imply, however, the loss of the right to deductions (Resolution No 46/E of 18 April 2019).
Any tax credit not used in whole or in part shall not be transferred nor in the event of death of the taxpayer nor in the event of the sale of the property cannot be transferred to anyone else. In the event of sale, the taxpayer will be can continue to use the remaining instalments of tax credit for the rest of the ten year period.
Documents to Keep
- bank transfer receipt
- receipt of transaction (for payments by credit or debit card)
- account debit documentation (bank account statement)
- invoices for the purchase of the goods, indicating the nature, the quality and quantity of goods and services acquired.