Minister Altmaier: “Tax breaks for retrofitting buildings benefit both climate change mitigation and local craft workers and jobs”

The cabinet today approved the draft act presented by the Finance Ministry to introduce tax breaks for improving the energy performance of buildings. The Federal Government is thus taking another important step towards implementing the key elements of the 2030 Climate Action Programme. The tax concessions are intended to supplement the Economic Affairs Ministry’s existing programmes to fund investment. The Economic Affairs Ministry has worked for years towards the introduction of this second pillar of assistance for buildings.

Economic Affairs Minister Peter Altmaier said: “This is a good day for our efforts to mitigate climate change in the building sector. I have long been a strong advocate of tax breaks for the retrofitting of buildings, and am glad that we have been able to launch this important project together today. Tax incentives for existing buildings are a central instrument and benefit both climate change mitigation and local craft workers and jobs.”

The draft law envisages tax breaks for individual measures to improve energy efficiency and to install heating systems which use renewable energy. Potential measures include replacing the heating system, fitting new windows, or insulating roofs and external walls. In future, it is to be possible to deduct up to 20% of the costs of such measures from tax over a three-year period. The tax concession is not progressive in its design, so that owners of buildings of all income brackets can benefit from the tax break. The only precondition is that the assisted building is an owner-occupied dwelling. The act is to come into effect for the 2020 fiscal year, so that spending on retrofitting can be claimed for the first time in the 2021 tax return.

People wishing to retrofit their houses will in future have a choice: either they can write off individual measures against their taxes, or they can apply for investment grants via the existing programmes like the CO2 Building Rehabilitation Programme, the Market Incentive Programme for heat from renewable energy, and the Heating Optimisation Programme. The 2030 Climate Action Programme adopted by the cabinet provides for further advantages for people wishing to retrofit their homes: in future, investment and repayment grants for individual measures and entire retrofits to achieve an “efficiency house” standard are to be increased by 10 percentage points.