On October 6, 2021, Royal Decree-Law 19/2021, of October 5, 2021, on urgent measures to boost building renovation activity in the context of the Recovery, Transformation and Resilience Plan was published in the Spanish Official State Gazette (BOE).

This regulation includes urgent and necessary measures to solve important challenges in terms of renovation and improvement of the Spanish housing stock, which includes a large number of old buildings. According to data from the latest Population and Housing Census of the National Institute of Statistics, more than half of the residential buildings date from before 1980, i.e. prior to the entry into force of the first regulations governing the thermal conditions of buildings. This situation affects 5.5 million residential buildings and about 9.7 million primary residencies.

The measures approved by the aforementioned Royal Decree-Law include, among others, tax measures, improvements in the system of property owners’ associations, and in the area of financing for renovation actions.

In reference to the tax measures, three new temporary deductions are added in the state income tax (IRPF) applicable to the amounts invested in renovation work:

• The first deduction, for work that contributes to the improvement of the energy efficiency of the main residence or house rented for residence, allows a deduction of up to 20 percent of the amounts paid for the work carried out as from the entry into force of this royal decree-law and until December 31, 2022, with a maximum deduction base of 5,000 euros per year, provided that the work carried out contribute to a reduction of at least 7 percent in the heating and cooling demand, accreditable through the reduction of the heating and cooling demand indicators of the energy efficiency certificate of the residence.
• The second deduction, for work that contributes to the improvement of the energy efficiency of the main residence or place rented for residence, allows a deduction of up to 40 percent of the amounts paid for the work carried out in the same time period as the previous deduction, up to a maximum of 7,500 euros per year, provided that the work carried out contribute to a reduction of at least 30 percent of the non-renewable primary energy consumption, accreditable through the reduction of the referred non-renewable primary energy consumption indicator of the energy efficiency certificate of the residence, or improve the energy rating of the residence to obtain an “A” or “B” energy class, on the same rating scale.
• Finally, a third deduction is established for renovation work that improves energy efficiency in buildings of predominantly residential use, which will allow deducting up to 60 percent of the amounts paid, up to a maximum of 15,000 euros of the amounts paid by the residence owner of the for the work carried out from the entry into force of this Royal Decree-Law until December 31, 2023, in which is obtained an improvement in the energy efficiency of the building as a whole where it is located, provided that a reduction in the consumption of non-renewable primary energy, referred to the energy certification, of at least 30 percent, or the improvement of the energy rating of the building to obtain an energy class “A” or “B”, in the same rating scale, is accredited through an energy efficiency certificate.

Furthermore, the Law on Land and Urban Rehabilitation, approved by Royal Legislative Decree 7/2015, of October 30 is amended in order to strengthen the powers of the communities of owners with full legal capacity for credit operations, both those related to building maintenance and renovation and improvement of buildings.

Finally, and with the purpose of promoting rehabilitation works, a line of guarantees has been created to partially cover on behalf of the State the financing of renovation work that contribute to the improvement of the energy efficiency of residential buildings. This new line of guarantees will provide coverage so that credit institutions can offer financing in the form of a loan with a repayment term of up to fifteen years under an agreement between the Ministry of Transport, Mobility and Urban Agenda and the Official Credit Institute (ICO).

Ignacio Puig
Energy Area