The Revenue Agency has clarified how even non-residents can take advantage of the renovation bonus.
The 110% Super Bonus is intended for both Italians and foreigners. As clarified by the Revenue Agency, this subsidy is also available for those who are not a resident in Italy. Non-residential applicants, as it is not possible to implement tax deductions on their income, will be able to receive the discount directly in an invoice or transfer the credit.
Deductions for Restoration and Qualifications
Regarding deductions due for restoring a building's heritage or upgrading its energy system, Il Decreto Rilancio - the Relaunch Decree - has introduced the possibility of opting for an advance contribution - instead of a direct deduction, which limited the number and type of applicants. An advance contribution will correspond with the amount of deduction expected and can be received as a discount in one's invoice, or even through a credit transfer.
Scope of Application
Currently, the Super Bonus is applicable to expenses incurred from July 1, 2020 to December 31, 2021 and is valid for restorations carried out by the entire condominium, individuals on a single real estate unit, or entities in charge of the management of buildings (IACP, Cooperatives, amateur sport associations, etc.).
The deduction is for individuals operating "outside the scope of business activities, arts, and professions," i.e., real estate, who are subject to qualified restorations and who are not attributable to so-called "assets related to enterprise" (Article 65 of TUIR – Consolidated Law on Income Tax) or to those instrumental for the scope of arts or professions (Article 54, paragraph 2, of TUIR).
In order to benefit from the deduction, individuals must have a title that demonstrates ownership of the property. A preliminary sale agreement is also considered suitable; "the promissory buyer of the property subject to restoration is also entitled to the deduction provided that the property has been stipulated by a legally registered preliminary sales contract."
Circular 24/2020, issued by the Revenue Agency, states that "deduction is for energy efficiency measures and the reduction of seismic risk in buildings. Additionally, there is the option to transfer or discount in lieu the deduction as set out in Articles 119 and 121 of Decree-Law No. 34 dated May 19, 2020 (Relaunch Decree), amendments outlined in Law No. 77 dated July 17, 2020." According to Circular 24, the benefit is intended for "individuals, outside the scope of business, arts, and professions."
This applies to:
- Italian citizens, resident in Italy or abroad, who wish to purchase/renovate a property in Italy.
- Foreign citizens, resident in Italy or abroad, who wish to purchase/renovate a property in Italy.
In other words, those who do not generate an income from work in Italy, on which the deduction is usually calculated, will be able to benefit from the Super Bonus through alternative routes, i.e., discount or transfer.
This is not only the case for foreigners, but also for those who enjoy substitute tax regimes, such as, the "forfettario" (a flat-rate sum).
This benefit is valid for everyone; in essence, even those who could benefit from a deduction have the option to opt for a discount or credit transfer.
Credit Assignment With the 110% Super Bonus
In the event of a discount, and thus zero costs, the total amount cannot be higher than the amount due. The supplier of goods and services relating to the subsidized restorations is required to advance the expenses, which can be recovered in the form of a tax credit equal to the deduction due. Alternatively, one may transfer the credit to other parties.
If one transfers the credit to a bank or another financial intermediary, they will be able to claim it as compensation through filing the F24 Form, or by transferring it to other entities.
The 110% Super Bonus, in any case, is applicable only for the individual who deducts it. When they pay their taxes, they will be able to make five deductions in installments for expenses up to a total discount of 110%.
Relatives of the Owner Eligibility for the Bonus
Relatives of the owner may carry out the work and therefore access the bonus, according to Article 5, paragraph 5, of the TUIR. Relatives include spouses, civil union partners (Law May 20, 2016, n. 76), third-degree relatives, and second-degree relatives-in-law in addition to de facto cohabitants (Law n. 76 of 2016). Relatives are only eligible if they are cohabitants of the owner of the property subject to renovation. Renovations may be carried out on a property in which cohabitation is possible other than the property intended as the main residence. Following this same principle, relatives cannot claim the deduction themselves. Consequently, it is not the relative's responsibility if the property where the work will be carried out is rented or granted on loan and is therefore unavailable.
In Italy it is a favorable time to invest in real estate, both as a consequence of the pandemic (cost cutting combined with a desire to escape) and as a result of the choice by several small municipalities to offer properties for sale at symbolic prices, provided that those who buy them upgrades them. There is also the possibility of obtaining mortgages at subsidized rates.
Originally published 14 September 2021
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.