The thermal modernization relief is one of the currently available tax reliefs that homeowners can take advantage of if they have performed certain thermal modernization works on the property. Who exactly can take advantage of the relief in 2024 and what expenses can be included?
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Who is eligible for thermal modernization relief?
The beneficiaries of the thermal modernization relief may be owners or co-owners of single-family houses, if the property belongs to spouses, for example. This is a solution designed for people who plan and implement selected renovation works aimed at improving the energy efficiency of their single-family residential building.
The legislator provides for what types of work and on what basis can be settled under the indicated relief. The full list of expenses that can be deducted is indicated in the regulation of the Minister of Investment and Development of 21 December 2018 on the specification of the list of types of construction materials, equipment and services related to the implementation of a thermal modernization project.
The thermal modernisation relief is therefore available to persons performing the following types of thermal modernisation works:
- replacing heat sources with solutions with better energy efficiency;
- expenses related to the purchase and installation of building insulation;
- expenses for the purchase, installation and commissioning of renewable energy source installations, such as heat pumps or photovoltaics;
- replacement of window and door joinery elements;
- modernization of the ventilation system.
Under the thermal modernisation relief, you can also settle expenses incurred for preparing a thermal modernisation audit.
How long can you benefit from the thermal modernization tax relief?
When carrying out thermal modernisation works, it is important to remember to collect further evidence of incurred expenses. The basis for deduction is a VAT invoice, the document must be issued by payers of the goods and services tax who do not use the exemption. It is therefore very important to verify your contractors before signing a contract or starting cooperation, so that it does not turn out that the costs cannot be settled.
The legal basis for using the thermal modernization relief is the Personal Income Tax Act. The value of the amount settled cannot exceed the income of the person filing the return in a given tax year. However, the legislator allows for the possibility of settling the surplus in subsequent years, while specifying the maximum period for using the relief - no longer than 6 years. In order to use the thermal modernization relief, it should be remembered that these works cannot last longer than 3 years, from the time of incurring the first expense.
How to calculate the amount of thermal modernization relief?
The amount of the thermal modernization relief that one person can use has been set by the legislator at PLN 53,000. Importantly, this is the amount provided for all work carried out. Spouses are in a favorable situation if they are co-owners of the house. Then each of them can use the relief of PLN 53,000 in the PIT tax return, which gives a total amount of PLN 106,000.
The method of settling the relief and the type of document depend on the individual situation of the taxpayer. Both individuals who do not run a business and those who run a business have the right to deductions, regardless of whether they pay PIT income tax based on the tax scale, as a 19% flat tax or a flat rate on recorded revenues.
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Appropriate documentation for the right to thermal modernization relief
The use of the thermal modernization relief is only possible in the event of having an appropriate VAT invoice. In the case of spouses using the relief, it does not matter which of them the document is issued to, as long as the indicated expenses are incurred for a joint, deductible property.
It should be remembered that a VAT invoice is not the only necessary document, you will also need evidence of payment of the debt. If the invoice was not cash, it is best to attach a confirmation to the document, e.g. a transfer to the invoice recipient.
In a situation where the relief is settled in connection with the costs incurred for the modernization or replacement of heating systems (including air heat pumps, ground heat pumps , or photovoltaic panels), appropriate documents will be necessary - work acceptance protocols. This is a document confirming the performance of specific works in accordance with the contract and that they have been accepted and accepted by the client. It is good if, in addition to the contracts signed with contractors, the developed cost estimates and energy audit are also stored, if it was performed and the stages of work were determined on its basis.
If the building is jointly owned, taxpayers should draw up a joint ownership agreement, containing information on the division of costs and the joint responsibility of each person.
Based on the collected documentation, persons entitled to the relief settle expenses at the end of the tax year, including it in the appropriate form (PIT 36 or PIT 37) and relevant attachments.
Who is responsible for implementing thermal modernization?
The responsibility for the correct execution of thermal modernization always rests with the owner or co-owners of a single-family home. Due to the fact that other entities are also involved in the process, including contractors, it was necessary to divide the responsibility among other entities as well.
The main responsibility lies with the owner, who makes decisions and plans actions, selects contractors to carry out individual works and finances the entire process. In turn, the company selected by the owner is responsible for the proper execution of the order, in accordance with the principles required under thermal modernization. When all the works have been completed, it is his duty to hand over the building, most often with the required acceptance protocols, which confirms that the tasks performed were performed correctly.
What does the 2024/2025 thermal modernization tax relief cover?
In 2024/2025, the thermal modernisation relief will cover in particular:
- expenditure on construction materials and equipment, in particular insulating materials for the modernisation of heating systems and window and door joinery;
- purchase and installation of heating equipment and installations, including replacement of the heating source with modern boilers and furnaces, ventilation systems with heat recovery, solar and photovoltaic installations ;
- heating connections.
Changing the heat source to ecological and modern solutions is one of the elements of thermal modernization, which has been carried out regularly for several years in order to protect the environment and the economy. Not only the replacement, but also the liquidation of the local heat source and connection to the heating network can be settled as part of the relief.