Major Tax Incentives for Home Renovation in Italy (2024-2033)

by Adriana ruiz

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Taxpayers carrying out renovation work on residential buildings and common areas of residential complexes in Italy are entitled to claim significant tax relief. This benefit allows individuals to deduct a portion of the expenses incurred from their Italian personal income tax (Irpef).

This article outlines the rules, beneficiaries, and changing deduction rates for these home improvement incentives, which apply based on the cash principle—meaning the deduction is claimed in the tax year the payment was actually made. The total deduction is then divided among all eligible parties who bore the cost.

Who Qualifies for the Renovation Deduction?

The incentive is available to any taxpayer subject to Italian personal income tax (Irpef), regardless of whether they are a tax resident of Italy, provided they bear the costs of the renovation.

Eligible individuals include:

• Property Owners

• Holders of Real or Personal Rights (e.g., usufructuary, bare owners, users, or those with habitation rights)

• Tenants (Inquilini)

• Cohabiting Family Members of the property owner or holder (including spouses, civil union partners, relatives up to the third degree, and in-laws up to the second degree).

• Cohabiting Partners (convivente more uxorio), for expenses incurred since January 1, 2016.

Deduction Rates and Maximum Spending Limit

The benefit is generally spread over ten equal annual installments. The maximum expenditure limit for the deduction is €96,000 per residential unit.

The applicable deduction rate varies significantly based on when the expense was paid:

High Deduction Period (2012 – 2024)
For expenses incurred from June 26, 2012, through December 31, 2024, the deduction rate is 50% of the qualifying expenditure, up to the €96,000 limit per property.

• Note: For residential properties used partly for business, art, or professional activities, the deduction is reduced by half.

New Regime & Transition Period (2025 – 2033)
For expenses incurred starting from January 1, 2025, the general deduction rate is set to decrease, with a gradual phase-out:

Tax Year	General Deduction Rate	Principal Residence Rate	Max Expense Limit
2025	36%	50%	€96,000
2026	30%	36%	€96,000
2027 – 2033	30%	30%	€96,000

• Note: The 30% base rate applies generally from 2025 onward, but the higher rates (50% and 36%) are applicable in 2025, 2026, and 2027 if the property is the taxpayer’s principal residence (abitazione principale).

Special Exceptions

• Emergency Generators: Expenses for replacing an existing emergency generator set with a latest-generation gas emergency generator will retain a 50% deduction rate.

• Exclusion: The benefit does not apply to expenses for replacing existing winter climate control systems with boilers fueled solely by fossil fuels.

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