The principle
The right to a deduction arises from the combination of two elements: actually incurring the expenditure, and holding a title permitting the works on the property. Both elements must be present and at the same date.
It follows that an owner who does not pay does not claim, and that someone who pays without a title does not claim. It is the principle explaining all the situations that follow.
The categories of claimant
The field is wider than owners alone.
It includes owners and bare owners, holders of rights in rem such as usufruct, use, occupation and surface rights, occupiers holding an appropriate title, and in defined circumstances cohabiting family members and de facto partners. Each position requires a documented title.
It also includes, on the conditions the rules set, members of cooperatives, sole traders in respect of non business property, and the parties identified by specific provisions. The conditions attaching to each position must be checked separately.
The occupier's title and its date
A tenant or a borrower under a loan for use may claim the deduction, but on a condition to be checked at the outset. The agreement must bear a certain date preceding the start of the works.
The title must exist and must bear a certain date preceding the start of the works. A lease or loan for use registered after the site opens does not allow the occupier to claim expenditure on those works.
To this is added the owner's consent to the works being carried out, which must be obtained and documented. The consent should be obtained in writing before the start.
The operational consequence for the professional is a question to ask when taking instructions: who will incur the expenditure, and on what basis do they occupy the property. If the answer identifies an occupier, checking the date of the title precedes the start of the works.
Cohabiting family members and de facto partners
One very frequent situation deserves isolating. It concerns the owner's cohabiting family member.
A cohabiting family member of the owner or occupier may claim the deduction for expenditure they incur, on the conditions the rules provide. The same possibility is recognised for a de facto partner.
Two conditions govern its application.
The cohabitation must exist at the start of the works, or when the expenditure is incurred if that is earlier. The check is made against the earlier of the two dates.
The expenditure must actually be incurred by the family member, with documentation in their name. A document in another person's name cannot be used.
One limit should be flagged: the situation does not extend to property not at the family's disposal. A cohabiting family member cannot claim expenditure on a property of the owner put to another use.
| Position | Condition to document |
|---|---|
| Owner or bare owner | Title to the property |
| Holder of a right in rem | Instrument creating the usufruct, use, occupation or surface right |
| Tenant or borrower under a loan for use | Agreement with a certain date preceding the start, plus the owner's consent |
| Cohabiting family member or de facto partner | Cohabitation at the start of the works and expenditure records in their name |
| Co owners | Actual allocation of the expenditure, single cap per unit |
The match between who pays and who claims
This is the most frequent and the costliest error, because it arises at the moment of payment and cannot be cured afterwards. It is the misalignment between the invoice and the payer.
The expenditure records must allow the payment to be linked to the claimant. Invoice and bank transfer must be consistent with the position of the person intending to claim.
The typical situation is an invoice addressed to the owner and paid by a cohabiting son or daughter who intends to claim. The arrangement must be settled at the outset, deciding who the claimant will be and aligning the invoice and the payer accordingly.
Where expenditure is incurred by several parties, the deduction belongs to each in proportion to what they actually paid, and the documentation must make that allocation verifiable. The allocation must be documented at the time of payment.
Co ownership
On co owned property the general rule applies without qualification: whoever pays claims, within the limits of what they actually paid. The ownership share does not affect how the deduction is allocated.
It is therefore not the ownership share that determines how the deduction is allocated, but the actual allocation of the expenditure. The allocation should be settled before the first payment.
A planning possibility follows that is worth flagging to the client. On property co owned by parties with different tax capacity, payments can be arranged so as to place the expenditure with the co owner who has capacity. It is an arrangement to settle before payments are made and to document consistently.
The spending cap nevertheless attaches to the property unit and does not multiply with the number of co owners. Co owners therefore share a single cap.
The decisions to make before works begin
Four decisions should be taken at the start of the appointment rather than during the works. None of the four can be corrected after the first payment.
Who the claimant will be, and if there are several, in what proportions. The allocation should be put in writing.
On what basis the claimant holds the property, and whether the title bears a certain date preceding the start. A certain date on the title is a condition for occupiers.
How invoices will be addressed and who will make the payments, consistently with the previous decision. The consistency should be checked on every individual payment.
Whether the property is the claimant's main home, which determines the rate. The check is made against documents rather than a verbal statement.
They are four questions that take a few minutes and whose omission produces, months later, positions that cannot be corrected. They are worth putting at the first meeting with the client.
The most frequent errors
Misaligning the invoice and the payer is the first, and is irreversible. A payment already made cannot be corrected.
Starting works before registering the lease or loan for use is the second, and bars the occupier from claiming. Registration must be completed before the start.
Assuming the deduction follows ownership shares is the third, whereas it follows the expenditure actually incurred. The expenditure records are therefore the decisive element.
Not identifying the claimant at the start of the appointment is the fourth, and leaves the question to a stage where choices are already fixed. A late decision costs the benefit or part of it.
Note: the information in this page relates to Italy and is current as at the date of publication. The conditions applying to each category of claimant are clarified by the revenue administration's practice: the text in force should be checked before any operational use.