The energy renovation of the home

When modernizing a home or changing ownership, the question arises as to what subsidy options or tax benefits are available and how they can be claimed.

Would you like to get an overview of the BEG individual measures grant, tax simplification for photovoltaic systems and new regulations for sales tax? The following article will tell you everything you need to know.

The energetic renovation of the home – an overview of financing and tax subsidy options

Property owners are often confronted with extensive regulations when they have to renovate or modernize their homes. However, a renovation obligation can also take effect during a change of ownership. Regardless of whether a voluntary renovation is carried out or a statutory standard, such as the Building Energy Act (GEG), applies, the question of subsidies or tax benefits always arises – especially in times of rising interest rates and renovation costs.

1. Financial support for energy efficiency projects: The BEG Individual Measures Grant

One popular option for financial support, for example, is the BEG Individual Measures
grant. Measures in the field of energy efficiency and renewable energies are covered by a grant from the Federal Office of Economics and Export Control (BAFA). Beneficiaries can include measures on the building envelope, systems engineering, heat generation systems, heating optimization and specialist planning. The eligible costs are subsidized by up to 25%. In the case of specialist energy planning, subsidies of up to 50% are possible, up to a maximum of €20,000 per application and calendar year.

In principle, all investors are eligible to apply. The grant can be applied for electronically using a form from BAFA. The subsidized measure must not have been started at the time of application.

2. What other grants are available?

In addition, other subsidies such as the “Climate Neutral Buildings (FKG)” program of the City of Munich or loans from the KfW banking group may also be considered. It is particularly important here to check current funding opportunities before starting the measure and to apply for them.

If no subsidy program comes into question or is to be used, banks and savings banks usually offer homeowners low-interest and uncomplicated loans for renovation and refurbishment purposes.

3. Which tax incentives take effect?

As an alternative to the public programs, there are also tax incentives for homeowners. In addition to the tax reduction for craftsmen’s services, which is limited to a maximum of €1,200 per year, there is a somewhat more extensive tax reduction for energy-efficient renovations for income tax purposes for properties used for their own residential purposes. To qualify, the building must be more than 10 years old when the work begins and the work must be carried out by a specialist company.

Eligible measures are those from clearly defined groups of cases. These include the thermal insulation of walls, roof surfaces and floor ceilings, the replacement of windows or exterior doors, the replacement or installation of a ventilation system, the replacement of the heating system, the installation of digital systems for optimizing energy operation and consumption, and the optimization of existing heating systems, provided they are more than two years old. The measures must be carried out in accordance with the Energetic Renovation Measures Ordinance (ESanMV).

In order to benefit from the tax reduction, the proper execution must be confirmed in writing by the executing specialist company using an official form. If the above-mentioned conditions are met, 7% of the expenses in the year of completion of the measure and in the next calendar year (maximum €14,000 each) and 6% of the expenses in the calendar year after next (maximum €12,000) can be taken into account on application to reduce income tax. In addition, 50% of the costs of a professionally qualified energy consultant can be deducted. In total, the tax reduction is capped at €40,000 per property. If public funding is granted for a specific measure, a tax reduction is completely ruled out in this respect. There is a right to choose whether public funding or the tax reduction is claimed.

4. When does a tax simplification apply to photovoltaic systems and what is the prerequisite?

A real tax simplification applies retroactively from 01.01.2022 for the income tax treatment of photovoltaic systems. Since, as a rule, part of the electricity is fed into the public grid, the operation of the system regularly constitutes a commercial activity. Whereas up to now an application had to be made for income tax exemption, from 01.01.2022 the income from the feed-in and the withdrawals in relation to photovoltaic systems will in principle and automatically be exempt from income tax – there will be no need to determine profits.

The prerequisite for this is that the systems operated on single-family homes or commercially used real estate have a maximum installed gross capacity of 30 kW (peak) according to the market master data register. In the case of other buildings (e.g. apartment buildings), the system may have an output of up to 15 kW (peak) per residential or commercial unit. In addition, the total output per taxpayer or – in the case of a partnership per co-partnership – may not exceed 100 kW (peak). There is also an exemption from trade tax for systems with an installed capacity of up to 30 kilowatts.

5. What are the new sales tax regulations?

Last but not least, new VAT regulations have also been created as of 01.01.2023. A 0% VAT rate will apply to the supply of solar modules as well as essential components and the storage tank, provided that the supply is made to the operator of the system and is installed on or in the vicinity of dwellings in particular. This also brings significant simplifications in the area of sales tax.

These tax simplifications make the operation of a photovoltaic system significantly more attractive. Nevertheless, in individual cases, special questions can always arise in connection with the new regulations.

For this reason, it is advisable to obtain legal advice before embarking on a corresponding measure, so that the optimal implementation can be planned, taking into account the tax aspects.