What is Superbonus 110, how does it work, and who is eligible?
In 2020, the government approved the Recovery Decree to give support to families and businesses, and with this law introduced the so-called Superbonus 110, which provides a 110% deduction of all expenses incurred for those who will carry out interventions that will improve the performance, from the energetic standpoint, of their property.
In particular, the improvements concern thermal insulation, the replacement of winter air conditioning systems and the reduction of seismic risk.
The tax deduction applies to work performed from July 1, 2020 through June 30, 2022. However, anyone who has carried out works for at least 60% of the total intervention by June 30, 2022 will be entitled to the 110% deduction also for expenses incurred until December 31, 2022.
Who is eligible for Superbonus 110?
- Private individuals – both residents in Italy and abroad, provided that for works of individual real estate units not used for business activities, up to a maximum of 2 per individual owner;
- Condos;
- Autonomous institutes of Popular Houses (IACP);
- Third sector entities registered in public registers as non-profit and/or voluntary organizations;
- Amateur sports associations and societies;
To access the Superbonus 110 is necessary to improve the efficiency of the building of 2 energy classes, or otherwise achieve the highest possible class, the A4.
The procedure for admission requires that the property is fully compliant with building and zoning regulations.
If there is no correspondence between the actual state of the property (i.e. how it looks in reality) and the projects authorized by the municipality where it is located, then you will have to ” rectify” these irregularities.
Who should certify that your property is in compliance and that you can start off on the right foot?
A technician – be it an architect, surveyor, engineer – who will issue you a Report of Urban Conformity.
If after this verification your property is in full compliance, congratulations because you have passed the first of 38 steps necessary to obtain your Superbonus.
Yes, you got it right!
There are 38 files that you need to submit and have sworn in by a number of professionals who will have to certify, taking responsibility, that you are eligible for the 110 Superbonus.
This is not the occasion to list all the necessary technical investigations and asseverations, but it is important to know that the Inland Revenue has the possibility to ascertain possible irregularities by the 31st December of the eighth year following the year in which the declaration was submitted in order to obtain the tax benefit, in case of transfer of the credit to third parties (I will explain this in a moment).
If the Internal Revenue Service finds irregularities of various kinds, who is responsible?
You as the owner will have to pay back with interest, to the government, the entire amount you benefited from.
How can you get the government benefit?
Case 1
You pay for and perform the work by taking advantage of the deduction on your own.
Example:
- amount of works carried out: 30,000 euros
- 110% deduction: 33,000 euros in 5 years (6,600 euros/year)
- Recovery on the IRPEF tax return: 6,600 euros
In this case you must be an individual who produces income in Italy having the certainty of being able to deduct every year, for 5 years, at least 6,600 euros otherwise you will lose part of the benefits.
Case 2
You approach your bank to advance the money and then assign the credit to the bank.
Compared to the previous case you have to consider some aspects:
- What is the cost to the bank? – Consider the costs of starting the practice and the interest over time.
- Are you eligible for funding? – Does the bank check if your income and debt position is sufficient to grant you a new loan? Have you always been a good payer and have you always paid your debts regularly?
- The timeframe for confirmation that you can obtain financing is not quick. On average it takes a minimum of 30 days, up to a maximum of 60 days.
In this case the variable that works against you is TIME.
The money allocated by the State to the budget this year is about 30 billion.
It sounds like a lot, but when large condominiums come into play, this money will soon run out – there won’t be enough money for everyone – so you have to be fast.
Case 3
You cede your credit to external companies that, in addition to thinking about all the bureaucratic process, carry out the works.
Practically speaking, in comparison to the two previous cases where you pay for the works (directly or through a bank), in this case the company carrying out the works simply asks you to transfer the credit that you are owed by the State.
The twofold advantage is that you do not have to use your own monetary resources and you do not have to wait for bank times to obtain an answer for the financing.
It is not difficult to understand that this is the most “popular” formula, but…
Beware, for ” not all that glitters is gold”
Over the past few months, in addition to gathering information directly, I have met with several companies offering the opportunity to take advantage of Superbonus 110 through the transfer of credit.
All this led me to understand that:
- The bureaucratic process, before benefiting from the facilitation, is quite long;
- Many companies, which operate with credit assignment, are springing up like mushrooms. Even people from abroad are setting up new companies in Italy to propose this type of formula, having sniffed the big business;
- The “actors” involved in the entire chain are many, including technicians, accountants, contractors, financial institutions;
- People ask for the first information from their trusted technician who, in the best of cases, tells them that he has established a collaboration with other professionals or companies, but when I ask if the executing companies will be able to meet the deadlines to fall within the Decree, they start to give you unconvincing answers;
- Be wary of those who tell you that everything is free or almost free and you won’t have to pay a single euro because, from what I understand, this is not the case. The professionals involved, as mentioned, are many, and who is going to pay them? – read well the contract that you will be submitted;
Experience leads me to say that, in this scenario, you can easily run into speculators.
Be aware that if something goes wrong, the Revenue Agency will come to you.
The good news…
… is that there are solid companies on the market that have been dealing with energy efficiency in buildings for years.
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