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The VAT for the construction of the first house is 4% reduced for finished goods, while raw materials and semi-finished products are excluded. If you're about to buy your first home, know that you have one of the numerous tax benefits provided by the 2021 Budget Law at your side: the possibility of obtaining the reduced VAT for the first home.

In simple terms, with this incentive you have the opportunity to enjoy a reduction in the amount of VAT or Registration Tax due on the purchase of a property.

The deed of sale is the dream of many - probably yours too! - and thanks to the numerous financial incentives put in place by the government, it is easier to make it a reality. The important thing is to possess the necessary characteristics to access them.

So what are the requirements for the reduced VAT for the first home? When we say reduced VAT for the renovation of a first home, are we talking about the same thing? Come on in: we at Casavo will explain everything to you in this guide.

What we talk about in this guide:

Reduced VAT: how to request it and sample form

The aim of the the regulation governing the reduced VAT on first homes is without a doubt to stimulate the real estate market by rewarding all those who, like you, are about to buy or build a home. their first property.

The taxes to be paid when taking a similar step are often onerous and almost a deterrent, especially if you are among those who are impressed by piles of bills and paperwork.

However, consider that the reduced VAT of 4% or 10% for the first home could be the right opportunity to sweep away the anxieties and save some money to reinvest, perhaps, in the furnishings of your brand new property.

This tax reduction is applicable when:

the house you buy belongs to certain cadastral categories (non-luxury goods);
you have established, or intend to do so, your registered residence in the new property;
you possess specific documents (which we will discuss later).

To take advantage of the incentives made available by the State you will have to collect some documents and fill out a form dedicated to each of them. A rather straightforward process compared to the tortuous bureaucratic paths we often hear about!

Both for the 4% VAT for the purchase or construction of a first home and for the 10% VAT for renovations, you will need:

a copy of your tax code;
a copy of a valid identity document;
the SCIA or DIA relating to your property;
the reduced VAT declaration, which you can download here.

All these documents should not be submitted to the Revenue Agency or your accountant. You will need to speak directly with your real estate agents and provide them with everything they need to obtain the tax benefits you are entitled to.

Precisely in this regard, it is important to remember that for every bonus the government is willing to grant you—including VAT benefits—there are minimum requirements you must meet to obtain it. Let's see what they are.

10% VAT relief: what are the requirements

To be honest, rather than incentives aimed at purchasing a property, it would be correct to talk about a 10% VAT relief for the renovation of a first home.

The 10% VAT relief for a first home, in fact, is provided for building heritage recovery interventions and for maintenance of residential properties, whether they are of a nature:

ordinary, i.e. carried out with the aim of preserving finishes, floors, internal plaster, walls, ceilings, internal and external fixtures, roofs and terraces;
extraordinary, and aimed to the installation of elevators and emergency stairs, to the improvement of toilet facilities, to the subdivision or consolidation of real estate units.

The same reduced VAT rate also applies to significant construction site materials - fixtures, boilers, air conditioners, sanitary ware, security systems - provided that they are purchased directly from the company that will carry out the work and that their value is less than or equal to that of the maintenance service.

The following are not included among the requirements and therefore among the eligible services:

the supply of goods for the implementation of the interventions by companies other than the one to which you entrusted the work;
services performed following subcontracts;
services provided by other professionals.

Remember that the application of the reduced VAT is not automatic. As we anticipated, you must submit a declaration to the company in charge of the construction site in which you assume responsibility for applying the benefit. Your contact person on the construction site will take care of the rest.

To summarize: requirements for a reduced VAT rate of 10%

Required for: Required documents – Building renovation - Maintenance - Purchases of construction site goods – Tax code - Identity document - DIA - Reduced VAT declaration

Reduced VAT at 4%: what are the requirements

The reduced VAT of 4% for first homes, in addition to the purchase of a property, also applies if you decide to carry out extension work on your main residence. But let's proceed step by step.

The reduction of the ordinary VAT rate on construction is one of the longest-running measures in force; despite this, there is still much uncertainty about when it will actually be possible to benefit from it. The MEF circular no. 219 of 30 November 2020, and we at Casavo summarize it here to help you see clearly.

Reduced VAT at 4% for the expansion of a first home

The expansion of the first home benefits from the application of the 4% VAT rate provided that "after the completion of the works, the expanded part does not constitute a separate real estate unit and does not entail the possibility of attributing luxury characteristics to the resulting property". (Source: Ministry of Finance).

Reduced VAT rate of 4% for renovation of first homes

As regards renovations, you can benefit from the reduced rate of 4% only for ordinary and extraordinary maintenance work carried out to overcome or eliminate architectural barriers. VAT for other improvement works is 10% (if in doubt, go back to the previous paragraph).

Reduced VAT rate of 4% for construction of first homes

The reduced VAT rate of 4% is also applicable to the construction of a property to be used as a first home and for any work to be carried out subsequently. The only condition to be met is not to transform the property into a 5-star resort.

We are talking, for example, about the purchase and installation of doors and windows, sanitary ware and bathrooms, materials for electrical systems, boilers and radiators, flooring, tiles and bricks.

To summarize: requirements for a reduced 4% VAT rate

Intended for: Required documents: Extension of first home - Construction of first home - Renovation of first home Tax code - Identity document - SCIA - Reduced VAT declaration