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FINANCE

‘How we claimed Italy’s building bonus twice for the same property’

For those looking to make renovations to their property in Italy, the government is offering considerable sums of money to help. But look into the small print and it turns out you could access the same state funds more than once for the same property. Here's what we found.

The Italian government’s superbonus scheme is an incentive measure following the coronavirus crisis, which could see homeowners benefit from a 110 percent tax deduction on expenses related to property renovation.

Linked to costs for making homes safer and more energy efficient, the superbonus was introduced in the government’s Decreto Rilancio (Relaunch Decree) last year.

READ ALSO: The building bonuses you could claim in Italy in 2021

There are potentially hundreds of thousands of euros in savings to be made, spread across the so-called ‘ecobonus’ and ‘sismabonus’, which can be used in conjunction and offer state funds for making energy upgrades and reducing seismic risk respectively.

But it turns out property owners could make even bigger savings in renovation costs, as we discovered the ‘sismabonus’ – worth up to a considerable €96,000 – can be claimed more than once for the same property.

Photo: Milivoj Kuhar on Unsplash

So how can you access this hefty bonus multiple times?

Here’s a closer look at the government regulations and the pitfalls to watch out for.

Note: The schemes are complex and subject to change, so it’s important to get professional advice before buying and renovating.

What funding is available and who is it for?

The Sismabonus is for properties at risk of earthquakes. To claim from this kitty, the property must be in an area with a seismic risk level of 1, 2 or 3 (high, medium or medium-low). Those with a risk level of 4 (low) don’t qualify.

The scheme covers shared areas of buildings, detached houses, social housing and single-family homes, even within multi-family buildings.

There’s also no limit to the amount of properties you can renovate with this particular pot, which may be of particular interest to those with second (or multiple) homes in Italy.

What’s more, we stumbled upon the fact it can also be claimed more than once for the same property – in fact, you can claim a staggering €96,000 up to four times.

We were taken aback too. And absolutely elated.

Of course, there was a hint of caution and suspicion. Had we read it right? Can this be legitimate?

We’d had four months to pore over the terms and conditions of the superbonus, as that’s how long it’s taken for the sale to go through following submitting an offer.

READ ALSO: How to stay out of trouble when renovating your Italian property

It’s the first time I’ve bought a house – a wreck in need of demolition and complete rebuilding in fact – but I was pretty sure it goes a bit quicker where I’m from, in the UK.

Friends back home laughed at the system I’d found myself in and confirmed my frustrations were founded. This was a long time.

On the other hand, we were doing our sums and riffling through Italian bureaucracy in the meantime, to work out how much of a mortgage we’d need and how much of the various bonuses we may be eligible to claim.

And that’s how we unearthed this surprising discovery.

Photo: Katy Cao on Unsplash

The Agenzia delle Entrate (Italian Revenue Agency) stated, “The relief is also available if the work is carried out on buildings that are not condominiums, as they consist of several building units (up to four) owned by a single owner or in co-ownership.”

Nowhere does it plainly state that you can claim up to €96,000 more than once, which is why it’s easy to miss.

However, in a question posed to the Italian Revenue Agency, officials published a response that clarified how it’s possible to claim the sismabonus repeatedly on the same property.

A case study of coinciding Sismabonus claims

A petitioner submitted a query as co-owner of a property with her husband.

Along with their home, they have an independent garage and two other units, C/2 ‘magazzini e locali di deposito’ (warehouses and storage premises) and C/6 ‘stalle, scuderie, rimesse, autorimesse – senza fine di lucro’ (stables, sheds, garages – non-profit making).

The applicant stated that her residence is separated from the latter two units by a partition and “is functionally independent in that it has all its own installations and independent access from the outside.”

READ ALSO: 

Their renovation plans include “total demolition and reconstruction of the above-mentioned building units, without any increase in volume”, the document stated.

This is in order to merge the house with the extra buildings.

Therefore, the four existing building units will be demolished and that, once the work is completed, the result will be a single-family dwelling and a garage.

They asked for clarification on the maximum amount of expenditure permitted in the superbonus, as they believed that they could access the superbonus “as individual units since they are functionally independent”.

With regard to the earthquake-proofing interventions, they stated the expenditure limit of €96,000 should apply to “each of the three initial real estate units considered independent from each other” (the house and the other two units C/2 and C/6).

Here’s the response

“The superbonus also applies to interventions carried out by individuals, outside the exercise of business, art or profession, with reference to interventions on buildings consisting of two to four separately stacked real estate units, even if owned by a single owner or co-owned by several individuals,” stated the Italian Revenue Agency.

That means for property owners hoping to get government funds for renovations – you can claim the bonus on each part of your property, as long as they are separate units.

So for example, a garage, a shed or storage building are all eligible for up to €96,000 of bonus each in addition to your home. That’s confirmed in the amended article 119 of the Relaunch Decree.

We worked out that we can now claim up to €96,000 for the main property and the ‘magazzino’ (storage building) separately.

That’s €192,000 in government aid to contribute to our house building fund – a life-changing figure for us.

Photo: Maria Ziegler/Unsplash

What to watch out for

As we haven’t yet got to the part where we actually claim the state aid, it’s still a case of wait and see if it’s too good to be true. However, after a conversation with our geometra (surveyor), it all looks above board and good to go.

There are other exceptions to watch out for, though.

First of all, the bonus doesn’t extend to certain types of buildings – prestigious villas and castles, for example, are excluded.

To access the bonus, you’ll also need to remember to hire an expert to assess the seismic risk and provide a certificate to prove the work has been effective in guarding against earthquakes.

READ MORE:

The final result must demonstrate a reduction in seismic risk by one or two classes.

If you’re buying a wreck to knock down and want to rebuild it completely differently, you’ll need to make sure it’s not in a historic centre, for example.

If it is, it’s essential to maintain the previous characteristics of the old building and rebuild the property the same size.

Next Steps

To check whether you are eligible, speak to a professional and check the Agenzia delle Entrate website before you begin any work on property.

If you’re keen to buy, you may also want to take a look at our guide to the additional costs you might not be expecting, and read up on some of the common mistakes to avoid when buying a house in Italy.

See more in The Local’s Italian property section.

Member comments

  1. So far as I have read these monies are not a grant but a tax abatement/saving. Yes increased from about 50% to 110%. Not many people can recover 192,000 in tax otherwise payable in the likely short life time of such a baited trap…. BEWARE.

  2. Do I have the maths correct? To gain 192,000 in tax refund one needs an income of 834,783 taxed at 23% to recover the bonus?

  3. Of course everyone in Italy wants to utilize the ecobonus 110% and sismabonus so many architects (who do all of the extensive documentation) are accepting all clients and their deposits without limit. The end result is that architects have way more projects than they can handle and many projects are going nowhere.

    In Sicily there is widespread doubt that the government money will ever arrive and if not, the projects get stuck in limbo as construction teams won’t work without funds.

    Hoping for the best but in the south very few projects have started work and we’ve heard of none that have been finished/paid yet.

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READER QUESTIONS

Reader question: Do you need to cancel your residency when leaving Italy?

How do you cancel your residency permit when leaving Italy - and do you even need to do so at all? The Local looks into the rules.

Reader question: Do you need to cancel your residency when leaving Italy?

Question: My partner and I are leaving Italy after several years of living here. Do we need to cancel our residency? If so, can you advise us on how to go about doing this?

Most people know that you need to register as a resident in Italy if spending more then 90 days in the country. But what should you do if you decide to leave?

Do foreign nationals need to deregister as a resident, and under which circumstances? And how do you go about doing cancelling your residency?

We asked the experts to talk us through when you should deregister as an Italian resident and the the steps involved in cancelling your Italian residency.

Should you bother cancelling your residency?

As is so often the case when it comes to complex bureaucratic questions, the answer is: it depends. Both on your personal circumstances and on the type of residency permit you hold.

If you’re relocating away from Italy permanently then deregistering as a resident and informing the authorities of your new address is a legal requirement – and you’d want to do so anyway, says Nicolò Bolla of the tax consultancy firm Accounting Bolla.

READ ALSO: What’s the difference between Italian residency and citizenship?

On the other hand, if you’re moving away on a temporary basis, you’re not required to cancel your Italian residency.

“If, for instance, you undertake a two-year assignment somewhere, you can still remain a resident and benefit from all the coverage a resident has, such as healthcare,” Bolla explains.

You might want to hold on to your Italian residency in the short term if you're not sure whether the move will be permanent.
You might want to hold on to your Italian residency in the short term if you’re not sure whether the move will be permanent. Photo by MIGUEL MEDINA / AFP.

There’s no official time limit for this – you could leave Italy for a number of years while maintaining your residency and then return to live in the country as if there had been no break.

That means that if you’re leaving Italy and aren’t sure whether you want to return, you might want to keep your residency status, at least in the short term (it’s possible to be legally resident in both Italy and another country).

Financial planning and property consultant Daniel Shillito warns: “you want to be sure if you’re leaving the country that it was a permanent decision, and that you weren’t aiming to come back to live – because if you do want to, it could be tricky and quite administrative.”

For British citizens in particular, he points out, “having an Italian residency these days is a valuable thing, it’s not easy to get again.”

This all applies to those with permanent or long-term residency.

If you have a temporary residence permit, you will no longer be considered resident in Italy as soon as it expires – so you may decide it’s not worth bothering to cancel your residency if it’s due to expire anyway shortly after you leave.

Why does it matter?

There are multiple factors to consider here, the biggest of which is taxes.

If you’re resident in Italy, you’re expected to pay taxes here. However, if you’re moving to a country with which Italy has a double taxation agreement or dual tax treaty, you’re protected from being taxed twice on the same income. Many states, including the UK, America, Australia and Canada, have dual taxation treaties with Italy. 

READ ALSO: Can second-home owners get an Italian residence permit?

If you’re moving to a country which doesn’t have a double tax agreement with Italy, on the other hand, you’ll be legally required pay the full amount of Italian tax on your income even if you spend very little time in Italy, so will almost certainly want to cancel your residency.

Even if you’re moving to a country that does have a dual tax treaty with Italy, you may still want to deregister as an Italian resident in order to avoid having to deal with the paperwork involved in proving you’re a dual resident whose tax obligations are limited.

There’s also a third category of emigrant: for those moving to a country on the EU’s tax haven blacklist, such as Panama, simply deregistering as an Italian resident won’t keep the tax authorities at bay. The burden of proof is on the individual to demonstrate they actually reside in the blacklist country and aren’t just trying to evade Italian taxes.

In these situations, Bolla advises clients to register as resident in an intermediate third country after leaving Italy and before moving to the blacklisted country in order to avoid the extra bureaucracy.

READ ALSO: What taxes do you need to pay if you own a second home in Italy?

Do you need to cancel your residency when leaving Italy?

There are multiple factors to consider when deciding whether to cancel your Italian residency. Photo by FABIO MUZZI / AFP.

Other considerations

Besides where you pay your income tax, you’ll want to consider other factors such as official correspondence, tax breaks, and timeframes for residency-based citizenship applications, Bolla says.

If you maintain Italian residency, the authorities will expect to be able to reach you at your registered address, including for things like traffic fines or notifications of tax audits. If you no longer have any link to that address and no one to forward your correspondence on to you, you could end up in a sticky legal situation.

It’s also worth taking into account the fact that new Italian residents can access certain tax breaks that aren’t available to people who’ve lived here for a while. If you cancel your residency and then return to Italy at a later date, you’ll be eligible for those incentives in a way that you wouldn’t be if you’d kept your residency.

On the other hand, Bolla notes, maintaining Italian residency could work in favour of those interested in pursuing citizenship through residency.

An individual must be continuously resident in Italy for 10 years before they can apply for Italian citizenship based on their long-term residence status.

In theory, maintaining your Italian residency while you’re temporarily abroad could mean that period still counts towards towards those ten years and you won’t have to restart the clock on your return – though it’s important to consult a professional if you’re considering this option.

How can you go about cancelling your residency?

There’s no standardised national protocol for cancelling your residency. Instead, you’ll need to contact the comune, or town hall, you’re registered with to inform them of the change and ask them what you need to do.

The process could be as simple as sending a few emails, without even having to set foot in the building. There may also be a form to fill out. Because things vary from one municipality to another, you’ll need to contact your local comune to find out exactly what’s required.

Generally the process can only be completed after, not before, leaving the country, because you’ll need to provide your new address and possibly supporting documentation proving that you’re now resident elsewhere.

“You say me and my family – and then you list all the members – are no longer residing in your town, please deregister us, and our new address is (e.g.) 123, Fifth Avenue, New York,” says Bolla.

If you have a Spid (Sistema Pubblico di Identità Digitale or ‘Public Digital Identity System’) electronic ID, Bolla notes, in many towns and cities (such as Milan), the process can be completed online through the comune‘s website.

You should expect to receive confirmation that you and your dependents have been deregistered as Italian residents, so it’s worth following up until you receive this.

READ ALSO: How to use your Italian ID card to access official services online

Shillito advises using a PEC (Posta Elettronica Certificata, or Electronic Certified Mail) email account if you have one when communicating with your comune about deregistering. 

Messages sent between PEC accounts are certified with a date and time stamp to show when you sent them and when they were received, with a record of receipt automatically emailed to you as an attachment. Within in Italy they have the same legal value as a physical lettera raccomandata (registered letter).

“That secure email communication is official, you’ve got a receipt showing it’s been received,” says Shillito.

“That way you’ve got evidence and a record that you’ve communicated it to them, in case anything went wrong in the future and the Italian government decided to claim you were still living in Italy.”

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