The government’s economic team is examining a scenario to extend the tax discount for property renovations into 2027, allowing homeowners who proceed with upgrade works to retain a tax reduction benefit of up to €16,000, provided the relevant conditions are met.
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The estimated fiscal cost of extending the measure does not exceed €5 million, and the initiative is part of the broader government strategy to boost housing supply and bring vacant apartments back onto the market — at a time when the housing crisis remains acute.
How the renovation tax discount is calculated
Under the current framework, taxpayers who incur expenses for the renovation, repair, or energy upgrade of properties are entitled to a total tax discount of up to €16,000. The discount is not granted as a lump sum but is spread over five years, with the annual benefit reaching up to €3,200.
For example, a taxpayer who carries out renovation works totalling €15,000 in 2026 could secure a tax benefit of €3,000 per year over a five-year period, with the relief gradually reflected in the tax settlement notices for subsequent tax years.
A key condition for taking advantage of the measure is that the relevant expenses must have been settled using electronic payment methods, and the required documentation must have been submitted to the Independent Authority for Public Revenue (AADE). In this way, the government’s economic team also seeks to close the door on undeclared “cash-in-hand” transactions in the construction sector, as the mandatory use of electronic payments reinforces the need for professionals to issue proper receipts.
Who qualifies for the tax discount and what counts as “eligible expenditure”
Eligible for the tax reduction are individuals who hold full ownership rights or usufruct over the building in which the eligible expenditure for energy, functional, and aesthetic upgrades is carried out, as well as individuals who hold bare ownership rights over the property, provided they use it either as a primary or secondary residence or as the registered seat or branch of their business activity. In such cases, only the person in whose name the relevant document is issued is entitled to the reduction.
The framework stipulates that “eligible expenditure” covers all buildings regardless of their use — residential and commercial premises alike — provided they are not already participating or enrolled in a building upgrade programme or any other subsidy scheme or action, and are recognised for the purpose of the tax reduction.
The tax benefit from the renovation is secured by the individual who incurred the costs and holds full ownership, usufruct, or bare ownership rights over the property. However, the following clarifications apply:
- In the case of co-ownership, the maximum total expenditure ceiling and the income tax reduction are proportionally limited based on the full ownership share of the individual who incurred the expense.
- In cases where the individual who incurred the expense holds usufruct or bare ownership rights over the building, the maximum total expenditure ceiling and the income tax reduction are limited proportionally according to the value of that right relative to the total (objective) value of the property.
- In the case of expenditure on common areas, settled by the building or property complex manager using electronic payment methods or through a payment service provider, such expenses are taken into account for eligible beneficiaries in proportion to their co-ownership share in thousandths, based on a relevant certificate issued by the manager, which includes the Property Tax Identification Number (ATAK) of the property located within the building for which the relevant expenditure is incurred.
Electronic payments are mandatory
For the income tax reduction to apply, all of the following conditions must be cumulatively met:
- Proof of the expenditure must be provided through valid documentation (invoice or retail sales receipt for goods or services), clearly stating the type and value of the goods and services, the details of the individual (full name, tax identification number), and the details of the property (ATAK) — except in the case of common areas, for which only the property address is required.
- Partial or full settlement of the expenses, regardless of their amount, must have taken place within the relevant tax year using electronic payment methods or through a payment service provider.
An “electronic payment method” means any payment method that requires the involvement of a telecommunications or electronic network — such as money transfers via dedicated online applications (e-banking), payment cards, digital wallets, and similar instruments. Payment service providers include, among others, credit institutions, postal cheque offices, and payment institutions, regardless of whether they are established domestically or abroad (within the EU or in third countries).
Any portion of expenditure on goods and services that is not settled through the above-mentioned methods is not recognised for the purposes of the tax discount. All documentation (receipts and invoices) must have been transmitted to the AADE.
