Bonus facciate tax incentives 2020: are they really worth?

The scope of the Bonus Facciate 2020 (facade bonus) tax incentive and the cases in which, in order to access this tax incentive, it is necessary to improve a building’s energy efficiency by carrying out work that could benefit more from the Ecobonus

Published on 3 March 2020

How Bonus Facciate works and when it is worthwhile

Italy’s housing stock is “old” and in urgent need of renovation. For this reason, and in view of the decarbonisation goals for 2030 outlined in the Energy and Climate Plan (PNIEC), in recent years a number of tax incentive schemes have been introduced. They are designed to boost energy efficiency and building safety, and they include the Ecobonus and the Sismabonus. The most recent addition to this framework of incentives is the Bonus Facciate 2020, which is being promoted by the Ministry for Cultural Heritage. It is intended to encourage the “improvement” of buildings in Italian cities, and this incentive scheme has been included in the latest budget legislation. It is, however, important to understand its actual scope, in particular, to avoid the risk of missing out on the most worthwhile tax credits, or parts of them.

The scope of the Bonus Facciate 2020

The Agenzia delle Entrate (the Italian Revenue Office) has clarified and defined the field of application of the Bonus Facciate 2020 with a circular notification and a set of guidelines. The Bonus involves a tax credit of 90% that can be applied to gross income, and is divided into 10 annual payments of equal size of the cost sustained during 2020 (or the tax year in question on 31 December 2o20 for those firms with tax obligations that do not coincide with the calendar year). The costs in question refer to all work to redeem or restore a building’s external facade, including simple cleaning and painting, but also work on balconies, ornamental and decorative features as well as gutters, parapets and cornicing. The tax credit also concerns related costs.

Who can benefit from the Bonus

The incentive does not include a maximum cost limit and is accessible to all subjects that pay either IRPEF (personal income tax) or IRES (corporate income tax): tenants or owners, residents and non-residents, private individuals and companies. The incentive is not accessible, however, to people whose tax payments are subject to separate taxation, substitute or flat-rate taxation, unless they have other income sources for which they pay the aforementioned taxes. The work must apply to existing buildings, of any planning category, situated in A areas (historic centres) or B areas (totally or partially built-up areas) – or in similar such areas, in accordance with ministerial decree 1444/68 – and in compliance with the relevant regional and municipal regulations. The tax incentive is not applicable for other buildings located in areas that differ from those mentioned above.

The incentive applies to work carried out on the entirety of the visible external perimeter of the building, meaning the front and main body of the property, as well as the other sides of the building. The tax credit is not applicable, however, for work carried out on the internal façade, with the exception of those visible from the street or from public land. Costs for work carried out on adjacent surfaces with cloisters, courtyards, internal spaces or replacement windows, window fittings, and doors are not included, as these are covered by the Ecobonus incentive for promoting buildings’ energy efficiency.

Energy efficiency renovation and the criteria necessary to access the Bonus

In order to qualify for the Bonus, payments must be made via bank transfer and must specify: the reason for the payment, the tax code of the beneficiary and the VAT code or tax code of the company or professional carrying out the work. The applicants’ tax declaration must include the relevant land registry data concerning the property and, if the work was commissioned by the property owner, the details of the registration of the act determining ownership of the property, in order to check the tax credit. It will also be obligatory to present, on request, all of the documentation indicated in the circular 2/E 2020.

This same circular notification establishes that, if the work consists of simple cleaning or painting, access to the Bonus is relatively straightforward: apartment residents are merely required to submit the official decision of the building’s occupants to proceed with the work, together with the certification of the bank transfer from by the building administrator. However, in more frequent cases – in view of the age and widespread state of deterioration of Italy’s housing stock – of more incisive work, the procedure is more complex. In particular, if it concerns more than 10 % of the surface of the overall heat-losing surface of the building adjoining the exterior or if in any way it influences the thermal behaviour of the building, the Bonus is recognised only in cases in which the aforementioned work meets the criteria indicated by the MISE (Ministry for Economic Development) in the so called “minimum requisites” decree and in the regulations relating to values of thermal transmittance.

Bonus Facciate or Ecobonus?

For this type of work, residents in apartment buildings can choose to request the Bonus Facciate or the Ecobonus. In the case of choosing the Bonus Facciate, the total cost incurred during 2020 is to be paid immediately by the building and 90% can be recouped in 10 annual payments of an equal amount. In the case of the Ecobonus, however, until the end of 2021, it is necessary to pay only a part of the total costs incurred by transferring the tax credit  - of up to 85% of the total cost  – intended as a partial form of payment to the company that carries out the work.

When and why is it worth applying for the Ecobonus?

The tax incentive for facades does not include the transfer of the tax credit and the subjects with less taxable income (or who might risk falling below the appropriate threshold of taxable income) must evaluate very carefully whether to apply for the Ecobonus or the Bonus Facciate. Opting for the Ecobonus is sure to mean that the original outlay will be less, as the subject must only cover the costs for the work that are not covered by the tax credit transfer of the remaining amount to the company carrying out the work. However, by applying for the Bonus Facciate, it will be necessary to pay the entire outlay immediately and, in order to benefit from recouping 90% of the costs, and the subject must be capable of meeting the appropriate tax criteria (with an appropriate level of taxable income) for the following 10 years (otherwise a part of the percentage of the tax credit will not be recoverable). The choice is yours.

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