Which measures for energy-efficient building renovation are eligible for tax incentives?
The climate protection programme, with expanded funding programmes, ensures that as many property owners as possible can invest in modernising their homes at short notice if needed. The following measures for energy-efficient building renovation are supported under the climate protection programme:
- Wall insulation
- Roof insulation
- Storey ceiling insulation
- Renewal of windows or external doors
- Renewal or installation of a ventilation system
- Renewal of the heating system
- Installation of digital systems for optimising energy operation and consumption
- Optimisation of existing heating systems.
In addition, energy-related construction supervision and specialist planning are eligible for tax incentives.
Technical minimum requirements apply to these measures, which must be met for funding. For this reason, the tax reduction under § 35c can only be claimed if a corresponding certificate is submitted with the tax return. The certificate can be confirmed by a specialist company or an energy consultant (a person authorised to issue certificates under § 21 Energy Saving Ordinance).
(2021): Which measures for energy-efficient building renovation are eligible for tax incentives?
What is the funding amount for energy-efficient building renovation?
The funding can be claimed for several individual measures, which can be carried out independently of each other.
For individual measures in energy-efficient building renovation, 20% of the expenses (max. 40,000 Euro per residential property) are eligible.
The funding is spread over three years. In the calendar year of completion of the energy measure and in the following calendar year, 7% of the expenses (max. 14,000 Euro annually) can be deducted from the tax liability, and in the third year, a further 6% of the expenses (max. 12,000 Euro) can be deducted.
For energy-related construction supervision and specialist planning, 50% of the costs incurred are deductible. You can find professionally qualified energy consultants for the planning and supervision of energy renovation projects throughout Germany at www.energie-effizienz-experten.de.
The funding can be claimed by a large number of homeowners. The tax incentive came into effect on 1 January 2020. The deduction is made directly from the individual tax liability.
(2021): What is the funding amount for energy-efficient building renovation?
What conditions must be met to claim the tax reduction?
You can benefit from the tax incentives for energy efficiency measures under Section 35c of the Income Tax Act if the property is used for your own residential purposes or provided free of charge to other persons.
To receive the tax incentives, the following conditions must also be met:
- The property must be located in Germany or the EU/EEA.
- At the start of the measures, the flat or residential building must be at least 10 years old.
- A certificate under Section 21 of the Energy Saving Ordinance from a specialist company or energy consultant must be available.
The certificate is generally issued for the owner(s) of the residential building/flat. You must also have received an invoice showing the eligible energy efficiency measures, the work carried out by the specialist company, and the address of the subsidised property.
The tax reduction depends on the payment being made to the account of the service provider. No tax reduction is granted for cash payments, cash advances, partial cash payments, or cash cheques.
(2021): What conditions must be met to claim the tax reduction?
Which companies can issue a specialist certificate?
The specialist certificate may be issued by craft businesses involved in building renovation. Specifically, these are businesses in the following areas (crafts requiring a licence according to § 1 Crafts Code):
- Masonry and concrete work
- Plastering work
- Painting and varnishing work
- Carpentry and joinery work
- Thermal, cold and stonemasonry work
- Well construction, roofing work
- Plumbing work
- Glazing work
- Heating construction and installation
- Refrigeration system construction
- Electrical engineering and installation
- Metal construction.
The renovation measure carried out must be part of the trade of the executing company.
In addition, the specialist company certificate can also be issued by an energy consultant (a person authorised to issue energy performance certificates according to § 21 Energy Saving Ordinance). The energy consultant must be commissioned by the executing specialist company or the building owner to provide planning support or supervision of the renovation measure.
In this case, the specialist company carrying out the energy renovation must also be a master craftsman's business or a business with an owner of comparable qualification in the above-listed areas.
The certificate is generally issued for the owner(s) of the residential building or apartment.
(2021): Which companies can issue a specialist certificate?
What alternatives are there to tax incentives?
As an alternative to tax incentives, public building subsidy programmes can be used. These include, for example, low-interest loans or tax-free grants offered by the Kreditanstalt für Wiederaufbau (KfW Bank), the Federal Office for Economic Affairs and Export Control (BAFA), and state-owned development banks.
If you make use of one of these subsidy programmes, simultaneous tax incentives for the same energy renovation measure are not possible.
It is harmless if you have received grants solely for energy consulting. In this case, no tax reduction can be claimed for the costs of the energy consulting. However, for the energy measures carried out as a result of the energy consulting, for which no public subsidies were claimed, the tax reduction can be applied for.
(2021): What alternatives are there to tax incentives?
What applies to residential property owners' associations?
If energy efficiency measures are carried out on a building consisting of several owner-occupied flats, a certificate must generally be issued for each individual flat. It is acceptable for the specialist company to issue a collective certificate for simplification purposes if the renovation expenses relate to the entire building or if the expenses attributable to the private property of individual flats can be clearly and unambiguously allocated to the individual flats.
If the owners' association has appointed a manager to handle its tasks and interests, the manager should be addressed as the client. In these cases, it is sufficient for the manager to allocate the expenses attributable to the co-ownership according to the ratio of the co-ownership share and inform the individual flat owner.
For this purpose, the manager creates a number of copies of the certificate from the specialist company corresponding to the number of beneficiaries, on which they note the amount of the expenses attributable to the respective beneficiary for the entire building and allocate the expenses attributable to the private property of individual flats to the specific flat owners.
(2021): What applies to residential property owners' associations?
