Filling in your annual income tax return is rarely anyone’s idea of fun, but for many Costa Blanca taxpayers it comes with one clear goal: paying as little as legally possible.
Beyond simply settling up with the Treasury, the tax campaign is also a chance to take advantage of deductions designed to reward certain investments.
One of the most generous in recent years is linked to housing, and in particular to making homes more energy efficient. If you meet the conditions set out in current rules, renovation works aimed at reducing energy use can bring tax savings of up to €9,000.
Energy efficiency
Energy-efficiency improvements have become a key feature of personal income tax incentives. The idea is simple: cut household energy consumption while encouraging a shift towards greener living.
There are three main levels of deduction, depending on how much energy the work saves and whether it applies to an individual property or an entire building.
20% deduction: basic improvements
The first level applies when the work reduces heating and cooling demand by at least 7%.
Typical qualifying projects include:
- Replacing old windows with energy-efficient ones
- Improving insulation
- Upgrading external walls or building envelopes
In these cases, you can deduct 20% of what you spend, with a maximum annual base of €5,000. That means up to €1,000 off your tax bill per year.
This applies not only to your main home but also to properties you rent out or plan to rent, as long as legal time limits are respected.
40% deduction: major energy savings
The second level increases the deduction to 40% if the work:
- Cuts non-renewable energy use by at least 30%, or
- Improves the property’s energy rating to A or B
This often includes:
- High-efficiency heating or air conditioning systems
- Solar panels or other renewable installations
- Extensive insulation upgrades
Here, the maximum annual base is €7,500, giving potential tax savings of up to €3,000.
60% deduction: whole buildings and communities
The highest level is aimed at renovation works affecting entire residential buildings or carried out through homeowners’ associations.
If the project achieves:
- A 30% reduction in non-renewable energy use, or
- An energy rating of A or B
Each owner can deduct 60% of their share of the investment.
The annual base limit is €5,000, but unused amounts can be carried forward for up to four years, reaching a total base of €15,000. This is how overall tax savings can reach as much as €9,000.
What you must have to qualify
To claim any of these deductions, strict technical conditions apply:
- An energy certificate before the works start
- A second certificate after completion showing the improvement
- Both issued by a qualified technician
Deadlines matter:
- Final certificate before 1 January 2027 for individual homes
- Before 1 January 2028 for full buildings
No cash payments allowed
All payments must be traceable:
- Bank transfer
- Card payment
- Named cheque
Cash payments automatically disqualify the deduction, even if everything else is correct.
Any public grants or subsidies received must be deducted from the amount you claim, and purely cosmetic renovations, normal maintenance and fossil-fuel installations do not qualify.
How long the scheme runs
Energy-efficiency deductions apply to:
- Private home works carried out up to 31 December 2026
- Whole-building projects up to the end of 2027
For homeowners, this leaves time to plan renovations carefully and even spread costs over different tax years to make the most of the savings.
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