Double Extension for Tax Deduction on Property Renovations

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The Ministry of Finance has extended not just by one, but two years the tax deduction measure for property renovation expenses. This provision was included in the legislative proposal regarding financial management reform, recently submitted to Parliament. While primarily a fiscal initiative, it also aligns with housing policy goals, aiming to encourage property owners to renovate and open up vacant homes, thereby increasing the residential stock.

Originally set to expire earlier, the extension until 2026 allows property owners to better plan their renovation budgets without facing delays seen in previous years. The tax benefit now covers renovation costs related to energy efficiency, functional upgrades, and aesthetic improvements made to primary residences.

Specifically, eligible expenses include:

  • Energy upgrades (e.g., insulation, window replacement, natural gas boilers, or heat pumps)
  • Functional improvements (e.g., electrical, plumbing, or repair works)
  • Aesthetic renovations (e.g., painting, flooring changes)

To qualify, the expenses must be paid electronically. Taxpayers can claim a 40% tax reduction on qualifying costs, up to €16,000 total (€3,200 annually over five years). Key conditions apply:

  • The renovated property must be the taxpayer’s main residence or that of a dependent family member.
  • All payments must be made electronically (credit/debit card, e-banking, etc.).
  • Material costs must not exceed one-third of the total cost relative to provided services.

This change is outlined in Article 71 of the new draft legislation, extending the benefit for expenses incurred until December 31, 2026.