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Budget 2022: Which of Italy’s building bonuses have been extended?

Since the Italian government made the 2022 budget into law, many reforms to Italy's various building bonuses have been extended or changed. Here's what those planning to build or renovate need to know.

Italy's 2022 budget has changed change building projects for homeowners in Italy.
Photo by MAX BEDENDI on Unsplash

The Italian government announced its raft of budget measures for 2022 at the end of last month, effective from January 1st, including tax and pensions reforms, help with household bills and funds to close the gender pay gap.

What particularly stood out for those buying and renovating property was the highly anticipated news on extensions to tax breaks for home renovations.

After much discussion over the last few months of 2021, the authorities confirmed how the various building bonuses will be rolled on and who is eligible to access them, as published in the final Budget Law (Legge di Bilancio) on December 30th, 2021.

EXPLAINED: What changes in Italy’s new budget?

To encourage investment in construction and increase energy efficiency and seismic resilience of existing buildings, the Italian authorities have continued the bonuses for building renovations, energy upgrading, the purchase of furniture and household appliances and the green bonus.

Many of them have been extended to 2024 – however, different deadlines to claim now apply.

Here’s an overview of the building bonuses for 2022 and how they’ve changed.

Renovating Italian property with bonuses.
The superbonus 110 is due to expire next June for single family homes. Photo: Sensei Minimal/Unsplash

The superbonus 110

Italy’s government launched the ‘superbonus 110‘ in May 2020, one of various measures aimed at boosting the Covid-hit economy.

Offering homeowners up to 110% deductions on expenses related to energy upgrades and reducing seismic risk, the scheme has been so in demand that homeowners are stuck amid delays on many projects as construction companies struggle to keep up.

After much speculation and concern as to how this building bonus would continue into 2022, the superbonus on single-family homes has been approved for the whole of this year.

READ ALSO:

The previous caveat has been scrapped. Now there’s no reference to only being eligible if it’s your first home and if you have an ISEE (the social-economic indicator of household wealth) of €25,000 maximum.

The only requirement is that 30 percent of works must be completed by June 30th 2022.

Condominiums, owners of buildings consisting of two to four units and third sector organisations will be able to take advantage of the benefit until 2025, with a sliding scale: 110 percent remains valid until 31 December 2023, dropping to 70 percent in 2024 and 65 percent in 2025.

Italian property renovation.
Photo: reisetopia on Unsplash

Facades bonus

Another bonus extended for 2022 is the Bonus Facciate. This scheme previously allowed you to deduct 90 percent of the amount incurred for renovating the exterior facades of buildings, with no maximum spending limits.

In spite of some initial uncertainty, the facade bonus has been extended again – although in 2022 the percentage of the deduction for restoration work on external facades has dropped to 60 percent.

There are still no maximum spending limits for 2022 for works carried out on the restoration and recovery of external facades, balconies and railings of buildings. This applies to both independent houses and condominium buildings located in historic centres, suburbs and both large and small municipalities.

This bonus has so far been extended until the end of December 2022.

The furniture and appliances bonus

The state aid available for buying household appliances – the Bonus Mobili e Elettrodomestici – has been rolled on until 2024.

The Budget Law 2022 has doubled the maximum amount of eligible expenditure to what had been discussed, now standing at €10,000.

READ ALSO: How to stay out of trouble when renovating your Italian property

This scheme applies to household goods of at least A+ class (A for ovens), intended to furnish a property undergoing renovation, and other appliances such as washing machines, washer-dryers, dishwashers. refrigerators and freezers.

It consists of a 50 percent personal income tax deduction of a maximum €10,000 expenditure or can be applied for via credit transfer or a discount on the invoice. This applies to the purchase of furniture and household appliances to furnish a property undergoing renovation.

The subsidy is linked to the renovation bonus. To be sure you can access it, the renovation work must have begun before buying any furniture or appliances – but expenses on restoring the property don’t need to actually be paid beforehand.

Renovation bonus

The Bonus Ristrutturazioni has been confirmed until December 31st 2024, allowing homeowners to apply for a 50 percent tax reduction on carrying out renovation work in both individual properties and condominiums.

The rules remain unchanged – there continues to be a maximum limit on expenses of €96,000 and the 50 percent offset to taxes is divided into annual instalments for 10 years. Or you can apply for the invoice discount or credit transfer.

There is a raft of allowances for accessing this bonus. These include making repairs on property that has been damaged, building garages or parking spaces, increasing security of the property such as installing gates, security doors and CCTV, removing asbestos and gas detection equipment.

Not only are homeowners eligible to apply for this bonus, also tenants of properties, separated spouses of the property owner and co-habiting partners are too.

READ ALSO: Italy’s building bonus: Can you really claim back the cost of renovating property?

Photo: Andrew CABALLERO-REYNOLDS / AFP

Ecobonus

The 50 percent and 65 percent ecobonus, a tax deduction aimed at encouraging energy upgrading in buildings, will remain in force and will exist in parallel with the ‘superbonus’.

Its extension in the 2022 Budget Law will allow taxpayers to benefit from tax discounts for works aimed at improving the energy performance of existing buildings.

READ ALSO:

The ordinary ‘ecobonus’, which has less stringent eligibility criteria than the 110 percent ‘superbonus’, is an IRPEF (income tax) and IRES tax (corporate income tax) deduction recognised for numerous expenses, including those relating to the replacement of boilers or windows and frames, for instance.

The following tax deduction rates have been confirmed in the Budget Law:

  • 50 percent for window frames, biomass and solar screens;
  • 65 percent for the remaining types of expenditure.
  • If works are carried out on common condominium areas, the amount of tax deduction varies from 70 percent to 75 percent.

Sismabonus

The sismabonus is intended for renovation work in areas hit by seismic events and for making homes safe by upgrading the seismic class on parts of buildings or single property units. It has been extended to the end of 2024.

The 2022 Budget Law has confirmed that it will be possible to opt for various tax deductions if you choose to reduce the seismic risk of your home.

Depending on the type of work carried out on the property, there are different amounts of the bonus available. From a 50 percent deduction up to 85 percent bonus in some cases. This can either be claimed via tax deductions or the more rapid credit trasnfer or discount on invoice.

This bonus has been available for a number of years, and provides a maximum expenditure of €96,000 for each building unit.

First home bonus for under 36

Tax incentives for the first home bonus for young people, in this instance categorised as under 36, have been extended for the whole of 2022.

UPDATE: Under 36? Here’s how Italy plans to help you buy a house

Rent discounts for young people

Young people, classed as between 20 and 31 for this measure, could benefit from a 20 percent discount on rent up to €2,000. The deduction can also be used by under 31s, out-of-town students, who simply rent a room.

It is intended for those who leave home and have their own income up to a maximum of €15,493.71.

According to the Budget Law text, the discount applies whether you rent an entire flat or a room.

It must “be used as their own residence, provided that the same is different from the main residence of their parents or of those to whom they are entrusted by the competent bodies.”

The measure is due to last for four years. Certain properties such as luxury buildings are excluded from the bonus.

Green bonus

The Bonus Verde has also been extended into 2022 – you could get state help for landscaping your garden or private outdoor areas of existing property, supplying plants and shrubs, doing work on fences, irrigation systems, building wells, roofs or roof gardens.

There’s a 36 percent tax deduction available for jobs relating to gardens, terraces and green areas in general.

If using the tax deduction method, the tax relief applied in the tax return must be divided into 10 annual instalments of equal amounts and must not exceed a maximum expenditure equal to €5,000 for each property.

Therefore, amounts of up to €1,800 (36 percent of €5,000) can be claimed back. This bonus can also be claimed via credit transfer or a discount on the invoice.

Unlike the furniture bonus, this deduction is not linked to the incurring of expenses related to the building renovation.

How claiming building bonuses will change

Perhaps the most eagerly anticipated feature of the new Budget Law was how people could claim.

Many building tax bonuses are available via credit transfer (cessione del credito) or a discount on the invoice (sconto in fattura), the Budget Law confirmed.

READ ALSO: Do you have to be Italian to claim Italy’s building bonuses?

Both these options were set to expire on December 31st 2021 for most, leaving tax deduction the only option – making it difficult for more people to access the bonuses quickly.

Despite earlier suggestions, government aid for renovating property such as the sismabonus, ecobonus, bonus facciate, bonus mobili and bonus verde will be able to count on these important financial measures, crucial for the start of works.

The superbonus 110 will also continue to benefit from credit transfer and a discount on the invoice.

See more in The Local’s Italian property section.

Member comments

  1. Regarding the deadline of June 30, 2022 for the Superbonus 110%, does the work need to have started by December 31, 2021 or does it only need to be finished by June 30, 2022 regardless of start date? GRAZIE!!

  2. We have recently purhcased a property that needs renovating, extending, landscaping etc. etc. We have been told that as non-residents we can pay for the work to be completed and then we can claim a percentage of the costs back through our bank – does anybody else have any experience of this and could comment with advice please? Much appreciated. *no work has started yet we have only recently taken ownership of the property and land.

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PROPERTY

Nine things we’ve learned about claiming Italy’s building ‘superbonus’

Two years after it was introduced, Italy's popular renovation discount scheme continues to cause headaches for homeowners trying to access it. Here's what we've learned so far about claiming the so-called 'superbonus 110'.

Nine things we've learned about claiming Italy's building 'superbonus'

In May 2020, as the pandemic gripped Italy in its first wave, the government introduced a new building bonus programme to kickstart the country’s sluggish, Covid-hit economy.

This emergency response, known as the ‘superbonus 110′, came as part of the government’s Decreto Rilancio (Relaunch Decree), which offered a tax deduction of up to 110% on the expenses related to making energy upgrades and reducing seismic risk.

Other types of building bonuses existed before – and continue to be available.

However, none had offered quite so high a value to those looking to make home improvements on their property.

In fact, not only did the new measure incentivise people to upgrade their existing properties, it encouraged people to buy old, abandoned properties, making previously unfeasible renovation projects, in financial terms, a genuine possibility.

READ ALSO: How Italy’s building ‘superbonus’ has changed in 2022

We counted among those taking the plunge to buy a crumbling and uninhabitable building, with the intention to carry out extensive works thanks to funds from the superbonus.

Our property search completely changed due to the scheme and we planned on taking advantage of the generous sums of state aid.

After looking around and viewing properties for months, attracted by adverts that claimed a property was eligible for restoration with the superbonus, we found an old farmhouse – which had become a derelict wreck – in the lowlands countryside outside Bologna, near where we are already located.

(Photo by Philippe HUGUEN / AFP)

In our case, we had to demolish the old property and rebuild a home from scratch – it couldn’t be restored due to earthquake damage in the area, rendering it far too unstable and destroyed to ever be habitable again.

READ ALSO: Why we decided to build our new house in Italy out of wood

That wasn’t a disappointment as we had the opportunity to design our own home instead, choosing every angle, material, layout and floorplan we wanted. It would have been beyond our means to take on a project like this without the superbonus, but with it, we thought it was possible.

Incredibly, the small print of the incentive permits this too, as the government intended to reinvigorate the nation’s many old, damaged and inefficient buildings and recover lost land – including using existing plots to build new homes if the property was too damaged, as is the case for us.

So, we ploughed all our savings and the money from the sale from my husband’s apartment into a collapsing set of bricks, filled with junk and debris from years gone by.

Although daunting, the figures stacked up and meant that we could create our own country home with a manageable mortgage for around 15 years.

Since I’m now 37, that seemed to work well and it all looked reasonable.

READ ALSO:

But it was just the beginning, before the superbonus spiralled into delays, bureaucratic quagmires and fraudulent claims, which all contributed to making accessing the funds a stalemate for many homeowners.

18 months into our project, we have got as far as a concrete shape in the ground, the old farmhouse demolished, but no sign of our future home still – and a budget that has blown out of proportion, changing our financial future considerably.

18 months ‘ progress looks like this on our Italian property renovation project. Photo: Karli Drinkwater

The clock is ticking with deadlines too, albeit briefly extended, to access the bonus in time.

Since its inception, here’s what we have learned about (trying to) claim Italy’s superbonus 110.

1. Demand slowed down starting renovation projects

Within its first year, interest in the scheme was so high that building companies were overwhelmed and projects piled up in a queue.

Many firms stopped taking on new clients, as they battled to push through projects that were already delayed by months and some homeowners abandoned their plans altogether as a result.

As the backlog built up, firms increased their construction quotes and material prices rose – driven by a worldwide boom in cost increases and also most certainly not helped by Italy’s superbonus-fuelled building boom.

Photo by Bill Mead on Unsplash

The situation has continued to worsen due to the war in Ukraine, which has impeded the import and subsequently driven the cost of raw materials.

It was this demand that also saw us sit and wait, watching on while absolutely nothing happened and we continued to be stuck, all the while watching the project cost continually rack up.

READ ALSO: How to stay out of trouble when renovating your Italian property

It had taken four months just for the sale of the wreck to go through, so we were on the back foot already as far as the bonus is concerned.

We were ready to get going in May 2021 after putting in our offer on the property in the January, but in the past year, very little has happened.

We’ve since had to move out of our apartment, as the new owners understandably wanted to move in and we’re now effectively camping out in a part of my husband’s parents’ new house.

As they, too, are trying to access the superbonus, our life has been packed into boxes while we our living area and office is all squeezed into a garage.

I write this surrounded by scaffolding and orange construction barrier tape, now heavily pregnant, and trying not to lose hope that we’ll have our own place to go to.

Our building project has got no further than knocking down the old wreck and laying down the concrete foundations. One year on, there’s not even the bones of a structure.

READ ALSO:

So is it still demand for the bonus and materials that’s causing the delay?

Yes, but also a huge part is down to how you can claim the bonus.

2. Credit transfer problems stopped the banks lending

Another recent cause for a further slowdown is the change in how people could access the bonus and the increasing difficulty of obtaining credit.

There are a few routes to obtaining Italy’s superbonus. The option of offsetting tax from income is likely only financially viable for high earners, as any unused tax discount gets lost.

Image: moerschy / Pixabay

Let’s say your renovation costs come to €100,000, which are tax deductible at 110 percent for five years.

So, if you have a tax break of €22,000 every year for five years, therefore, but your tax bill from your income tax, known as ‘IRPEF’, falls short of that, you lose the deduction and will end up footing the rest of the renovation bill.

READ ALSO: Do you have to be Italian to claim Italy’s building bonuses?

Note – the latest changes specify tax deductions for the superbonus will be spread over four years, not five as previously.

Little surprise, then, that the other two options to access the funds – transferring the credit (cessione del credito) or discount on the invoice (sconto in fattura) – have been more popular.

It effectively means you either trade the tax credit for cash to an Italian financial institution, such as a bank, for the credit transfer, or directly to your contractor or supplier for the discount on the invoice.

Using the credit transfer system means you’ll get cash back that you paid, directly in your bank account.

It’s a slightly riskier route than a discount on the invoice, as the latter means the the supplier recovers the bonus on your behalf, taking a slice of it as a fee.

So, you get less of the bonus but you don’t have to deal with the paperwork and the contractor takes the burden of getting the credit.

“The easiest option is the discount on the invoice,” tax expert Nicolò Bolla of Accounting Bolla told us.

“It takes care of the credit transfer. If you deal with the bank yourself, it takes some expertise and requires a little knowledge of technology and the system, such as downloading and uploading invoices.

“Contractors have multiple sales, so they are more trained to do that,” he added.

However, billions of euros of fraudulent claims led the government to introduce stricter laws, blocking being able to access credit for months, putting the bonus – and renovation projects – on hold.

Our builders were using credit from financial services provider Poste Italiane, who reduced the threshold of credit. This pushed all the building jobs back by months with no word on when works would start.

In that time, they had to search for another bank willing to fund the bonus, while home construction sites lay dormant.

3. Banks blocked and refused credit halfway through projects

Some homeowners faced extra setbacks when they encountered not only delays, but an outright cancellation of prior agreed credit.

Peter (not his real name) told us that he had got the green light to access one of the other building bonuses that can be used in conjunction with the superbonus – the Renovation Bonus (Bonus Ristrutturazioni).

READ ALSO: Budget 2022: Which of Italy’s building bonuses have been extended?

It allows homeowners to apply for a 50 percent tax reduction on carrying out renovation work in both individual properties and condominiums.

The maximum limit on expenses of €96,000 and the 50 percent offset to taxes is divided into annual instalments for 10 years. Or you can apply for the invoice discount or credit transfer.

Photo by Cristina Gottardi on Unsplash

He applied and was approved for credit transfer for works on his home in Modigliana, Emilia Romagna. After buying a property with his partner in December 2020, they began renovations in January 2021, based on credit approved by Italian bank UniCredit.

He told us they carried out €60,000 of works for a new floor and underfloor, electrics and plumbing throughout, a new boiler, replastering walls and installing a new bathroom.

That means that €30,000 credit was due from the bank, but Peter told us they are now refusing to pay out.

“The excuse from the bank is that we didn’t sign with them, however they didn’t ask us to sign anything when they opened the portal for us at the beginning,” he told us.

So, while the bank registered the renovation jobs for them on the government’s portal in order to be able to claim the bonus, they now refuse to return the credit as originally agreed.

“The thing that upsets me so much with UniCredit is we made about 10 payments to builders and suppliers costing €7.50 a time (in administration fees) to make it, and taking the time to go into the bank especially, to get it registered correctly. And to be let down by them now, really is pretty bad,” he added.

Taking this route is “harder” according to Bolla, as “banks prefer to deal with larger businesses than to give credit to individuals,” he said.

For Peter, he now has the option of deducting the tax from his annual income tax bill or finding another bank to take on and transfer the credit.

4. Finding other solutions to open up the credit transfer system

As accessing finance slowed down and projects ground to a halt, the government intervened with yet another regulatory change to the superbonus.

Along with extending the deadline of 30 percent completion of works for single family homes by three months – to the end of September 30th 2022 – the authorities also looked at how to make accessing the funds more straightforward.

The reason for so many changes stems from how the superbonus originally started.

“Two years ago, it was the Wild West. Anyone could get credit to use the bonus – a person, company or business. Due to that, the authorities lost track of sales and plenty of fraudulent claims slipped through the net,” according to Bolla.

“Everything stopped. Then they regulated too much, creating more bureaucracy and delays. So now, they’ve deregulated a little to reopen the transfer of credit,” he added.

Understanding why there were delays to accessing the bonus are complex and manifold. Along with the reasons above, banks also faced rising inflation, which in part caused them to stop lending.

“Somebody needs to offset the tax at some point. Many banks wanted to buy the credit and resell it to larger banks, but any credit that couldn’t be offset in their taxes got wasted.

“It made the banks less willing to buy credit, which in turn slowed down companies’ and individuals’ ability to access it,” he added.

Now, to keep better track of works being done, Italy’s Inland Revenue Agency (L’Agenzia delle Entrate) has introduced better tracking systems in its latest ruling. These will follow the trail of where the money is going, with the aim of cutting down on time lost to bureaucracy.

5. You might – legally – be left with a half-finished house

Depending on what you’ve agreed with your construction company, you may be taking a gamble with the superbonus no matter what, even if works have begun and the system has eased the bottleneck on claiming the funds.

Our builders would only go ahead with the project if we signed a document, in short saying that we understand the project won’t be finished if the funds aren’t available in time or if works roll on past the deadline.

Photo by Filiz Elaerts on Unsplash

The firm wasn’t going to be liable for paying for the construction of our home (and others’ projects too) if they continued to get caught in delays.

In this case, we had no choice. Sign it and hope for the best or lose the €200,000 that has already gone into the works and wreck purchase so far.

6. There are added fees to account for when claiming the superbonus

If you’ve ever sold or bought property in Italy, you’ll know there is an abundance of hidden costs associated with it.

From agency and notary fees, taxes to legal costs, buying a property in Italy can incur another ten percent of the purchase price. For a list of the hidden costs to watch out for, see our guide here.

When it comes to restoring properties using the superbonus, you’ll need to fork out for various certificates, including an energy certificate known as ‘Certificato Energetico APE’ to prove that the property would benefit from energy upgrades using government funds.

This will also need to be done afterwards to prove that the property meets the requirements of the superbonus and has jumped up at least two energy classes.

You may also incur charges from your local town hall or comune for making changes to the property. In our case, as it’s a considerable project, the administrative fee just for submitting our house plans to review cost €12,000.

In total, the cost of fees on our project – before any restoration works using the bonus have taken place – have come to €30,000.

7. The amount you claim and pay continues to rise

Since the superbonus began, the scope of house restoration projects has changed significantly.

The noted demand pushed up construction quotes and material prices continue to rise, vastly increasing the scale of a project’s budget.

It will come as a blow to home renovators who thought they were potentially getting considerable sums of money from the government and therefore making huge savings.

In fact, there will still be large pots of funds to come from the government, but the problem is the price you pay will track the increases and rise too.

Our particular home renovation project has almost doubled since we began.

We initially accounted for a final cost of €450,000 for all works, using the superbonus for almost half of that.

Instead, the quote we received in November was over €700,000 (on top of what we’ve paid for the wreck) and we were told this is unlikely to be the final cost, rising in line with continuing material price rises when works do finally get underway.

The impact of this is life-changing. In our case, it means we’ve had to apply for soaring monthly repayments for 25 years instead of 15. And that’s only if the bank agrees to grant us such a huge financial commitment – which it has, as yet, not done.

8. You might have to pay taxes if you sell your house after claiming the superbonus

At least for a while, you may have to stick with the property you’ve renovated using the superbonus.

Once you’ve claimed this building bonus, essentially you can’t sell it on for another five years if you want to avoid paying capital gains tax.

Tax expert Nicolò Bolla said that this depends on when you bought the property, however.

If you already owned the house for more than five years and took advantage of the superbonus, you can sell it on with no capital gains tax.

On the other hand, if you just bought the property to benefit from the bonus, and therefore have only owned it for under five years, you’ll be liable for the tax – that is, if you make a gain on its sale.

If you bought an old wreck and renovated it, for instance, it’s likely that you will.

For more advice on selling your property after using the superbonus, remember to check with professionals beforehand.

9. It continues to be popular and set back by delays

Despite the recently extended deadline, homeowners continue to wait in queues for their projects to begin or be completed.

Tax expert Bolla told us he gets “daily requests” for the superbonus, but issues a word of caution about the incentive.

“It is a long journey and you need to have some money to renovate your property with the bonus. It’s an expanded timeframe and there are still supply chain issues,” he said.

Despite this, though, Bolla believes it’s an “amazing” scheme. “We have a lot of energy dependence, so this is a good way to upgrade. Normally, the way we deal with our reliance on energy is to punish those who pollute more with higher energy bills, but those are always lower income people.

“Higher energy costs just punish the poor – this, instead, is a good way to solve the problem.”

See more in our articles about property in Italy on The Local.

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