The government has decided to extend one of the most powerful tax advantages for homeowners until the end of 2026: income tax deductions for energy efficiency improvements, which allow homeowners to reduce their income tax bill by up to 40% and, in some cases, recover up to €3,000 per year.
The measure is part of a package of incentives linked to the energy renovation of homes, which the government has extended by royal decree until December 31, 2026, for homes and until 2027 for entire buildings.
How it works: levels and percentages
Editorial credit: Pedro Souto
The scheme is organized into three tiers according to the ambition of the works and the savings achieved.
- Basic level (up to 20%): for small interventions that reduce heating and cooling demand by at least 7%; the maximum annual base is €5,000 and the actual deduction can be up to €1,000.
- Intermediate level (up to 40%): designed for more extensive renovations in the primary residence or rental property, provided that a 30% reduction in non-renewable primary energy consumption is achieved or the energy rating is improved to A or B; the maximum annual base is €7,500 and the deduction can reach €3,000.
- Maximum level (up to 60%): reserved for comprehensive actions in entire residential buildings, where each owner can deduct up to €3,000 per year from their income tax if the property reduces its consumption by 30% or achieves an A or B rating.
Which owners benefit (and until when)
The government’s extension prevents these subsidies from expiring in December 2025 and gives a break to owners who did not have time to plan and carry out a renovation. Both owners of their primary residence and small landlords who rent out their apartment as the tenant’s permanent residence are eligible, provided that the work meets the efficiency criteria set out in the regulations. The work must have been carried out between October 6, 2021, and December 31, 2026 (in the case of individual homes), which opens a window of several years to organize projects without rushing.
This efficiency deduction is in addition to the specific reductions for owners who rent out their primary residence, regulated by the Housing Law, where the general reduction in net rental income is 50%, with bonuses rising to 60%, 70%, or even 90% in specific cases (recent renovation, rental to young people in high-demand areas, or price reductions compared to previous contracts).