Example: Deduction for energy rehabilitation works in buildings predominantly used for residential purposes

The community of owners of XXXX street number 23 has carried out a series of works to improve the energy efficiency of the building aimed at saving 50% of the energy consumed and achieving an improvement in the energy rating of the building to obtain an energy class "B". These works consist of improvements to the insulation of the façades, improvements to the thermal envelope, roofs and the breaking of thermal bridges, as well as the integration of renewable energy systems or installations into the building.

The works, which will be paid for by all owners (including commercial premises, homes and garages) according to their participation quota, will begin in December and end in April 2024. A loan has been requested to carry out the indicated works, which will be paid by the owners through monthly receipts. Once this financing has been obtained, the community of owners will make three payments for the improvement works. A first payment on December 1, 2023 by check, registered in the invoice issued by the contractor as "Certification on account of contract for energy efficiency improvement work", and two other payments that will be paid to the contractor on March 1 and May 1, 2024, respectively.

The marriage formed by Mr. JG and Mrs. TK, married under a community property regime, are the owners of a home located in said community (their habitual residence) and due to the coefficient of participation in said community, they are entitled to 8,000 euros of the first payment and 2,000 euros in the other two payments that will be paid by the Community of Owners to the contractor on March 1 and May 1, 2024.

The corresponding energy efficiency certificates were issued before and after the works. The latter will be issued on May 20, 2024 and will qualify the property as an energy class "B".

Determine the amount of the deduction that can be made in 2023, 2024 and 2025, whether they choose to file an individual or joint return, and the excess amounts that can be deducted in the following years.

Solution:

Year 2023

They will not be entitled to make the deduction.

The reason is that, despite having paid amounts in 2023 for the execution of the works, in this tax period the certificate has not been issued but it is issued in a later tax period (2024), therefore the deduction will be made in said later tax period (2024) taking into consideration in this case the amounts paid on December 1, 2023 (8,000 euros) and those paid on March 1 and May 1, 2024 (2,000 euros in each of them).

Year 2024

Mr. JG:

Deduction base: (8,000 euros + 4,000 euros) ÷ 2 = 6,000
Maximum base: 5,000
Deduction amount = 5,000 x 60% = 3,000
Remaining deduction base, deductible in the following four years: 6,000 – 5,000 = 1,000 euros
Accumulated base: 15,000 – 5,000 = 10,000

Mrs. TK

Deduction base: (8,000 euros + 4,000 euros) ÷ 2 = 6,000
Maximum base = 5,000 euros
Deduction amount = 5,000 x 60% = 3,000
Remaining deduction base, deductible in the following four years: 6,000 – 5,000 = 1,000 euros
Accumulated base: 15,000 – 5,000 = 10,000

Joint JG and TK

Deduction base: 12,000 euros
Maximum base = 5,000 euros
Deduction amount = 5,000 x 60% = 3,000
Remaining deduction base, deductible in the following four years: 12,000 – 5,000 = 7,000 euros
Accumulated base: 15,000 – 5,000 = 10,000

Year 2025

A. Yes Don JG and Mrs. TK They file an individual declaration in that fiscal year 2025

When they filed an individual return in 2024
- Outstanding amounts 2023: 1,000
- Maximum deduction base (the smallest of):
  
  - Maximum annual base per declaration: 5,000
  
  - Accumulated base: 10,000
  
  - Amounts pending deduction: 1,000
- Deduction amount = 1,000 x 60% = 600
- Pending balance = 0
When they filed a joint declaration in 2024
- Outstanding amounts 2023: 7,000 euros ÷ 2 = 3,500
- Maximum deduction base (the smallest of):
  
  - Maximum annual base per declaration: 5,000
  
  - Accumulated base: 10,000
  
  - Amounts pending deduction: 3.500
- Deduction amount = 3,500 x 60% = 2,100
- Pending balance = 0

B. Yes Don JG and Doña TK file joint return in 2025

When they filed an individual return in 2024
- Outstanding amounts 2023: 1,000 x 2 = 2,000
- Maximum deduction base (the smallest of):
  
  - Maximum annual base per declaration: 5,000
  
  - Accumulated base [15,000 - 5,000 individual JG - 5,000 individual TK] = 5,000
  
  - Amounts pending deduction: 2,000
- Deduction amount = 2,000 x 60% = 1,200
- Pending balance = 0
When in 2024 they filed a joint return
- Outstanding amounts 2023: 7,000 euros
- Maximum deduction base (the smallest of):
  
  - Maximum annual base per declaration: 5,000
  
  - Accumulated base: 10,000
  
  - Amounts pending deduction: 7.000
- Deduction amount = 5,000 x 60% = 3,000
- Pending balance = (7,000 - 5,000) = 2,000
- Accumulated base: 10,000 – 5,000 = 5,000
Note: Amounts paid but not deducted for exceeding the maximum annual deduction base (2,000 euros) may be deducted in fiscal year 2026.