Direct tax credit
Save on tax with blow-in insulation – the tax relief under Section 35c of the Income Tax Act
Blow-in insulation not only improves a building’s energy efficiency, but can even be deducted from your tax liability. Under the tax relief scheme provided for in Section 35c of the Income Tax Act (EStG), property owners have a straight forward way of claiming a portion of the modernization costs against their direct tax liability, without any complicated application procedures.
What the tax incentive under Section 35c of the Income Tax Act covers
The tax incentive is aimed at owners of owner-occupied residential property who carry out energy-efficiency upgrades to their buildings. Eligible measures include the installation of blow-in insulation in external walls, roof areas and floor slabs, provided that the specified technical requirements are met.
Through the tax bonus:
up to 20%
of the renovation costs can be deducted directly from income tax
a maximum of €40,000
per property is eligible for funding
Important: measures implemented by the end of 2029 are taken into account
The tax refund is spread over three years:
In the first and second years, 7% of the eligible costs (up to €14,000 per year) can be claimed in each year, and a further 6% (up to €12,000) in the third year.
The tax bonus therefore represents an attractive addition to or alternative for traditional subsidy schemes.
An overview of the benefits of tax incentives
The tax incentive is characterized by minimal administrative effort.
The key benefits:
- No separate application for funding is required
- No application deadlines or waiting periods for approvals
- Entry made directly in the tax return under the ‘Energy Measures’ section
- The bonus is deducted directly from the tax liability
This results in immediate financial relief – without the need for administrative procedures or complex approval processes.
How the tax incentive works
The tax reduction is spread over a period of three years. The following applies:
- The tax reduction can only be deducted up to the amount of income tax actually payable.
- The law does not provide for any cash payment (negative tax): the reduction is only applied up to the amount of the tax liability.
It may therefore be advisable for property owners to take the planned renovation period and their own tax liability into account in advance in order to make the most of this benefit.
Who the tax incentive is particularly suitable for
The tax incentive is particularly attractive for property owners who:
As blow-in insulation combines relatively low investment costs with high energy savings, it can be combined perfectly with the tax bonus. |
