Social shield deductions for property rehabilitation have benefited 34,300 homes in Catalonia

MadridCongress will again debate and vote next week on extending the social safety net, which includes, among other things, measures to prevent evictions of some vulnerable families. This comes after a failed attempt by the Votes against from the PP, Vox and JuntsThe Spanish government is taking the bill to the lower house for the second time – this time, with the pension increase included in a separate document. Currently, Pedro Sánchez's administration does not have the necessary votes secured, and the continuation of measures that have been sidelined – but have been in place for five years – depends on this. These measures include income tax deductions for building renovations that improve energy efficiency. In Catalonia, 34,383 homes have benefited from these deductions between 2021 and 2024, according to data from [source missing]. Special Rehabilitation BulletinThe Housing and Land Observatory and the Tax Agency, which ARA has accessed, have provided data.

Taking into account the evolution of properties that have benefited from these deductions during this period, and specifically the figures for the last available year – 2024, because the deadline for filing 2025 income tax returns is June 30 – this could benefit more than 0 to 2% of the proposed Catalans, according to estimates from the Ministry of Housing and Urban Agenda based on data from the Tax Agency.

Income tax deductions for building renovations that improve energy efficiency are included in the Spanish Recovery Plan, linked to European funds, a significant portion of which (€6.82 billion) was earmarked for housing. These tax incentives apply to private homes and residential buildings and range from 20% to 60%, depending on the reduction in non-renewable energy consumption.

While only 378 homes that underwent improvement works benefited from these tax incentives in 2021, the figure increased to 12,044 in 2024. Sources from the Ministry of Housing and Urban Agenda explain that "it is very likely" that the number of homes eligible for these tax incentives in 2026 "will exceed this figure," given the growth trend of recent years and the fact that these are deductions that complement other rehabilitation aid programs linked to the Recovery Plan.

What does the decree say?

In general terms, the 20% deduction can be applied if improvements have been made to the primary residence and heating and cooling demand is reduced by 7%. The 40% deduction also applies to the primary residence and any property placed on the rental market. In this case, the reduction in energy consumption must be 30% or the property's energy rating must be improved. The decree extends these two deductions until December 31, 2026. Finally, the 60% deduction applies to energy-efficient renovations of entire residential buildings that demonstrate a 30% reduction in consumption or achieve an energy rating of A or B. In this case, the extension is granted for two buildings.

The three deductions, which are mutually exclusive, must be demonstrated through an energy certificate and have a maximum limit on the amount that can be deducted from the personal income tax.

Economic impact

Like any tax incentive, it has an economic impact on public coffers. According to provisional data from the Tax Agency, accessed by ARA, a total of 122,527 personal income tax returns were filed across Spain in 2024 that included deductions for energy efficiency improvements. Of the money declared to qualify for these deductions, taxpayers saved €239.8 million.

According to estimates from the Ministry of Housing and Urban Agenda, based on data from the tax authority, the economic savings that Catalan homes could benefit from in a new year in which these tax benefits are maintained would be around "35.8 million euros".

In Catalonia, 60% of the housing stock was built before 1980, according to data from the Catalan Energy Institute. From that year onwards, insulation became mandatory. This means that, unless renovated, buildings constructed before 1980 lack thermal insulation. The situation is similar across the EU: 75% of buildings are not energy efficient and are responsible for 40% of total energy consumption and 36% of emissions. In this context, the main EU regulation aims to decarbonize the EU's building stock by 2050. This directive is mandatory for member states, which must transpose it into their national legislation.