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Bathroom renovation: how to pay less taxes thanks to tax deductions

Bathroom renovation: how to pay less taxes thanks to tax deductions

Renovation work is so important because it allows you to give a new look to your bathroom and make it more functional and enjoyable. However, renovation also entails an important economic burden that could be difficult to take on if you cannot benefit from tax deductions. So, let us see what the necessary steps are to take advantage of this important opportunity.

Bathroom renovation: tax deduction 2021

As the new financial law stands, bathroom renovation tax deduction will be valid for the whole of 2021 together with the Eco-bonus, the Furniture Bonus, and the Green Bonus. It allows you to obtain a 50% discount on the total cost actually incurred for the renovation work (including the planning). The total amount approved to benefit from deduction is € 96,000 for which the maximum deductible limit is € 48,000.

To be entitled to the deduction, bathroom renovation must involve not only the replacement of sanitary fixtures, but also the reconstruction of the plumbing system which should be compliant to legal standards and restyling. Only the replacement of the sanitary ware in fact is considered ordinary maintenance by the law and therefore does not entitle anyone to this type of tax deduction. Those who want to take advantage of this very important opportunity to renovate the bathroom must save all the documents relating to the work carried out (invoices) and pay through bank or postal transfer only. The payment description must include:

  • the data from the document it refers to (number and date of the invoice)
  • the reason for the payment (mentioning art.16 of Presidential Decree 917/86)
  • the personal data of the beneficiary (including the company's tax code or VAT number)
  • the tax code of the person who will benefit from the deduction

All papers must be carefully saved and then delivered to an accountant for the completion of the 730 individual income tax return form related to the year in which this expense was incurred. For payments made before 31 December 2020, the documents are part of the 730 form to be submitted by 2021, whilst for payments made starting from 1 January 2021 the records must be saved and attached to the individual income tax return form to be submitted in 2022.

As we have said, the deduction will be equal to half of the expenses actually incurred during the year. This amount will be divided into ten equal instalments: if, for example, you have carried out renovation work that involved an expense of € 96,000 (maximum limit), you will be entitled to get a bonus of € 48,000 which will be reimbursed in ten years, hence € 4,800 every year.

One aspect that requires particular attention concerns the coverage of the person entitled to the tax deduction. The annual reimbursement will be paid up to the amount of fees paid: any surplus will be lost, and it will not be possible to recuperate it in subsequent years. For example, suppose the case of two spouses who decide to carry out bathroom renovation in their flat and suppose that one of them has a low income on which IRPEF withholdings are minimal or non-existent: if the payment document (bank or postal transfer) contains this person’s tax code as a beneficiary of the deduction, he/she will be not entitled to obtain the reimbursement of € 4,800 per year, but only the total amount withheld from his/her pay check (any surplus would be lost).

The legal subjects entitled to the renovation tax deduction are not only the owners, but also those who have bare ownership or a right of use on the property, therefore the tenant is also eligible to benefit from the bathroom renovation tax deduction. Therefore, the tax incentive concerns not only the house where you live, but also the second home and this is an excellent opportunity for all those who intend to renovate the bathroom in the beach house or in the mountains.