Taxes for Renovating Property in Andalucia
1. VAT (IVA) on Renovation Work
✔️ Standard VAT Rate
✔ Most renovation and construction work in Spain — including Andalucía — is subject to standard VAT at 21%. This applies whether it’s cosmetic improvements or structural renovation.
• You pay this VAT on invoices from your contractor/supplier.
• This VAT is generally not recoverable by homeowner private individuals (unlike developers on new builds).
🏠 2. Income Tax Deductions for Renovations (IRPF)
Spain has tax incentives through the Personal Income Tax (IRPF) designed to encourage energy-efficiency and sustainability upgrades. These incentives are valid through end of 2026 for individual homes (and in some cases until 2027 for whole buildings), provided conditions are met.
🟢 Levels of Deduction
Deduction levels depend on how much the renovation improves energy efficiency:
20% Deduction – for works that reduce heating/cooling demand by at least 7%
• Max deduction: €1,000 per tax year
• Based on a maximum investment base of €5,000.
40% Deduction – for works that reduce non-renewable energy consumption by 30% or achieve energy class A or B
• Max deduction: €3,000 per tax year
• Based on a max base of €7,500.
60% Deduction – for renovations in entire residential buildings that meet those energy standards
• Max per dwelling: €3,000 annually
• With unused deduction possibly carried forward up to 4 years (total base €15,000).
📆 Deadlines & Documentation
• The final energy performance certificate must be issued before Jan 1, 2027 (for individual homes).
• For buildings, certificates must be issued by Jan 1, 2028.
• You must include official energy performance certificates and invoices with your tax return.
💡 Renovations that do not improve energy performance (e.g., purely decorative upgrades) do not qualify for these deductions.
🧰 3. Direct Grants & Subsidies
In 2026, Spain continues to offer EU-funded grants and local subsidies for energy-efficient home upgrades (under the PRTR / NextGenerationEU). These are separate from tax deductions and must be applied for through local authorities or autonomous community programs.
• Some subsidies may cover up to 40% (or more) of eligible costs, depending on scheme and criteria.
💡 Tax deductions and direct grants can usually be used together, increasing total savings available for qualifying renovation work. But you must apply and document separately for each.
🧾 4. Municipal & Ongoing Property Taxes (Non-Renovation Specific)
Renovating property does not change these ongoing taxes — but owners should budget for them:
📌 IBI (Property Tax)
• Annual municipal tax based on the cadastral value of the property.
• Rates vary by municipality.
📌 Waste & Other Local Fees
• Many municipalities charge rubbish collection and other local service taxes annually.
📉 5. Impact on Selling or Capital Gains
If you eventually sell the property, renovation costs that improve quality, useful life, or energy performance can be added to your acquisition cost for capital gains tax (CGT) purposes, reducing taxable gain — but only if properly documented with official invoices showing VAT.
• Routine maintenance or cosmetic repairs generally do not qualify.
📊 6. Practical Tips for Renovation Tax Planning
✅ Keep all official invoices (with VAT) — these are critical for both tax deductions and future CGT cost base.
✅ Hire qualified professionals (architects/engineers) to certify before/after energy performance — vital for deductions.
✅ Submit energy performance certificates and invoices on time — missing deadlines can invalidate deductions.
✅ Consult a local tax advisor — Spanish and regional tax rules evolve yearly and documentation requirements are strict.
These benefits are separate from standard VAT on renovations, which you generally pay at 21% and cannot recover without qualifying deductions.
Disclaimer
The information provided in this guide is for general informational purposes only and does not constitute legal, tax, financial, or investment advice. While PropertyList.es aims to ensure that all content is accurate and up to date at the time of publication, tax laws, regional regulations, and government incentive programs in Andalucía and Spain are subject to change and may vary depending on individual circumstances.
Tax deductions, grants, and VAT rules relating to property renovation depend on specific eligibility criteria, documentation requirements, and official approvals. Readers are strongly advised to consult a qualified tax advisor, accountant, or legal professional in Spain before making financial decisions or undertaking renovation works based on the information provided.
PropertyList.es operates solely as an online property advertising platform. We do not provide tax advice, verify eligibility for deductions or grants, guarantee the availability of government incentives, or assume responsibility for financial outcomes resulting from renovation or investment decisions.
PropertyList.es shall not be held liable for any loss, damage, or financial consequences arising directly or indirectly from reliance on the information contained in this guide.