When does reduced VAT apply to the renovation of a house?

April 22, 2021

Often new formats, materials or trends appear that can encourage us to renovate our home. It may also be the case of having to do it for functionality, such as the reforms derived due to the Covid-19. In this post you can read which are the most demanded reforms during the pandemic.

At Inmobiliaria Espígul we are not only dedicated to buying and renting properties. We also have a team that takes care of the construction and interior design of our new build properties and we offer the service of small reforms or integral reforms so that you get the home that suits your needs.

In today’s post we talk about what requirements you must meet to benefit from reduced VAT on private home renovations. That is to say, on what occasions it is granted in order to obtain 10% VAT on the renovation of your home.

Requirements to be met:

> The beneficiary of this VAT reduction must be a natural person and the purpose of the dwelling where the project is carried out must be for personal use.

> The refurbishment or construction of the home where the work is carried out must have been completed at least two years previously. In case you have done a work, and in less than two years you want to do it again, the VAT of the second reform would be 21%.

> That the owner of the work does not provide the necessary materials to make it possible. In the case of doing so, the cost cannot exceed 40% of the taxable base of the work.

If these basic conditions are met, you will be able to enjoy reduced VAT on all work involving a reform.

On which materials and installations can you benefit from reduced VAT?

In 2010 there was a turning point in terms of the application of reduced VAT, as it was only valid for construction activities. Since then, and currently, it applies to any refurbishment, renovation or repair work on the following activities:

> Electricity

> Installations

> Plasterers

> Sanitary fittings

> Bricklaying

> Carpentry

> Painting

As we have already mentioned, the owner can provide materials, but these cannot exceed 40% of the cost of the reform, as they imply little profit for the professional who carries out the reform.

In which cases does the VAT reduction not apply?

Heating and double glazing installations or installations of digital television, telephony or internet access are exempt from the application of reduced VAT.

What about the renovation of buildings and common areas?

In these cases you can also qualify for reduced VAT but two conditions must be met:

> That more than 50% of the works included in the refurbishment project have to do with structural elements of the building (façade, cements …).

> The total cost of the refurbishment must exceed 25% of the purchase price of the building if it is purchased two years before the refurbishment or the market value.

Bearing in mind the above points, it is advisable to calculate the total VAT with the professional who will carry out the renovation, taking into account all the specific work involved in the renovation and also the cost of all the materials required.

This can mean going from 21% VAT to 10% VAT in the final cost of the reform and it is quite an important difference to consider.

If you are thinking of renovating your home and you want to have a team of trusted professionals with more than 30 years of experience, Inmobiliaria Espígul is the best option. If you want more information you can contact us at hola@espigul.com or call us on 972 220 110. It’s time to have the house you’ve always wanted!

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