With Tax Ruling No. 273 of 2025, the Italian Revenue Agency clarified that individuals not tax resident in Italy, including Italian citizens registered with AIRE (Register of Italians Residing Abroad), are not entitled to the enhanced 50% IRPEF deduction for building renovation works under Article 16-bis of the TUIR (Italian Income Tax Code).
Non-residents may only benefit from the standard 36% deduction, even when the works concern their sole property located in Italy.
The Case
The taxpayer, an Italian citizen tax resident in Switzerland, owned a property in Italy used for personal stays and holidays.
In 2025, he carried out extraordinary maintenance, building renovation, and conservation works on the property.
He asked whether, in light of the amendments introduced by the 2025 Budget Law (Law No. 207/2024), he could benefit from the enhanced 50% IRPEF deduction instead of the ordinary 36%.
The law
The rules governing deductions for building renovation works are set out in Article 16-bis of the TUIR, which allows taxpayers to deduct from their IRPEF a percentage of the expenses incurred for the recovery of residential buildings, including extraordinary maintenance, restoration, conservation, and renovation works carried out on residential units and related appurtenances, as well as on common areas of residential buildings.
The benefit, permanently introduced into the TUIR, has been subject to numerous extensions and amendments over time.
Among these, Article 16 of Decree-Law No. 63 of 4 June 2013, converted into Law No. 90 of 3 August 2013, introduced an enhanced rate of 50%, compared to the ordinary 36%.
However, the 2025 Budget Law (Law No. 207 of 30 December 2024) completely revised paragraph 1 of the above-mentioned Article 16, redefining the deduction scheme for the 2025–2027 period.
Under the new provisions:
- For expenses incurred in 2025, a 36% deduction applies;
- For expenses incurred in 2026 and 2027, the deduction decreases to 30%;
- However, the deduction is increased to 50% (in 2025) and to 36% (in 2026–2027) if the renovation concerns the taxpayer’s principal residence.
The law also sets a maximum eligible expense of €96,000 per residential unit, regardless of the number of individuals sharing the cost.
Further guidelines were provided by Circular No. 8/E of 19 June 2025, in which the Revenue Agency specified that the enhanced rate (50% instead of 36%) applies only if:
- The taxpayer holds ownership rights, including bare ownership or surface rights, or another real right of use (usufruct, use, or habitation); and
- The property undergoing renovation is used as the taxpayer’s principal residence.
For tax purposes, under Article 10, paragraph 3-bis of the TUIR, the principal residence is defined as the dwelling where the taxpayer or their family members habitually reside.
Temporary absences due to hospitalization or health reasons do not affect this status, provided the property is not rented out.
Consistently with this definition, the Circular also clarified that the enhanced deduction applies:
- To works carried out on appurtenances or pertaining areas of the principal residence;
- Even when the property becomes the principal residence after the completion of the renovation works.
The Revenue Agency’s Response
The Agency recalled that, as already stated in Resolution No. 136/E of 2008, residence abroad excludes the possibility of considering a property located in Italy as a habitual residence.
Therefore, the taxpayer cannot classify the Italian property as their principal residence and is consequently not entitled to the enhanced 50% deduction, but only to the ordinary 36% rate.
