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V2546-17 9 October 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · rehabilitación de edificaciones

Reduced 10% VAT rate applicable to housing renovations if classified as rehabilitation or renewal

A taxpayer inquired about the VAT rate applicable to the comprehensive renovation of their primary residence. The DGT clarifies that the 10% reduced rate may be applied if the works qualify as rehabilitation or as renewal and repair, provided specific cost and material requirements are met.

The question raised

Applicable tax rate for the indicated works.

The DGT's ruling

To apply the 10% rate as rehabilitation, the primary objective must be reconstruction (more than 50% of the cost in structural elements, facades, or roofs) and the cost must exceed 25% of the value of the building excluding the land. As renovation and repair, the recipient must be an individual for personal use, the dwelling must have been completed at least two years ago, and the cost of materials cannot exceed 40% of the tax base. In both cases, the sale including the installation of kitchen and bathroom cabinets is also taxed at 10%.

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