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Renovation Grants Balearic Islands

Responsible for this content: Frank Menze

Balearic renovation tax relief

Estimate your possible income tax (IRPF) deduction for separately identified renovation costs. Presets are illustrations; check the confirmed requirements for your own case.

All amounts are per tax return: household amounts for a joint return, your allocated share for an individual return. For community works, use your coeficiente de participación (ownership share), DA 50ª.4, fifth paragraph. Allocate amounts before entering them; the calculator does not split them automatically.

Explanation

Eligible payments are the costs of this work allowed under DA 50ª.4. They include professional fees, design, site management, execution, materials and energy certificates (certificados de eficiencia energética); pay by card, bank transfer, named cheque or bank deposit. Cash and installation or replacement of fossil fuel equipment are excluded. Enter amounts per return. The preset is illustrative. Include payments made in this tax year and, in the first deduction year, earlier eligible payments for the same works.

Combined heating and cooling demand reduced by at least 7% (20%)

Explanation

The tier describes the proven energy improvement from this identified work. Select one tier for the same work; this does not generally exclude other independently assessed works in the same year.

Explanation

An energy performance certificate (certificado de eficiencia energética) records the energy indicators of your dwelling or building. Confirm the chosen tier's requirements: eligible main home or a dwelling you own and rent or intend to rent; for the building tier, ownership of a dwelling in a predominantly residential building. Before and after certificates must be issued and registered under RD 390/2021; the earlier certificate must be no more than 2 years old when work starts. Works and payments from 6 Oct 2021, for dwelling tiers through 31 Dec 2026, after certificate before 1 Jan 2027; for buildings through 31 Dec 2027, certificate before 1 Jan 2028. Intended letting must start before 31 Dec 2027. Dwelling tiers exclude business parts, garages, storage rooms, gardens, parks, pools, sports facilities and similar elements. Buildings exclude business parts but include garages and storage acquired with the dwelling. For the demand tier, the reduction applies to the sum of the two heating and cooling demand indicators together, not each separately. For the primary-energy tier, the alternative requires an improvement to class A or B compared with the pre-work certificate on the same scale; an existing class B alone is insufficient. For the building tier, primary-energy reduction or improvement to class A/B must be established using the entire building’s pre- and post-work certificates.

Explanation

A public grant is the amount awarded or definitively approved for these national eligible costs. Include unpaid amounts covered by a final award; an application or expectation does not count. DA 50ª.4, third paragraph.

Explanation

Used annual base means costs already claimed under the same tier this tax year, not the tax deduction. Enter the amount per return; the selected tier's cap is €5,000.00.

Explanation

Select the tax year you are calculating. The first deduction year also includes earlier eligible payments for the same works: in the AEAT example, the 2024 payment is included in 2025 with the 2025 certificate. Later payments belong to their respective tax year. Enter zero new costs for a carry-only year.

Explanation

Confirm that the post-work energy certificate had been issued before the end of the selected tax year; a certificate issued earlier also counts. This is required for new payments. Existing carried-forward bases retain their own deadline.

Explanation

Resident income tax liability means you are subject to Spanish income tax (IRPF) for this calculation. Without it, neither the national nor the Balearic deduction applies.

Explanation

Eligible self-funded costs are your own expenditure under art. 3.1: renewable installations reducing conventional heat or electricity consumption, water-saving measures, separate drainage and greywater or rainwater reuse systems or measures reducing discharge to public sewers. Enter the amount per return, with grants already deducted. Assess this base independently of the national base.

Explanation

The Balearic requirements determine whether your investment qualifies under art. 3. Confirm Balearic tax residence, a property there used as your main home or let as a main home under LAU, registered energy certificates before and after investment and improvement by at least 1 energy class, including for water-saving measures. Landlords also need the same tenant for at least 1 year, the deposit lodged with IBAVI, rent declared as rendimientos del capital inmobiliario (property income), and no passing investment costs to the tenant.

Explanation

Used Balearic annual base means costs already claimed this tax period within €10,000.00. Enter the base per return, not the deduction.

Explanation

Filing status means an individual or joint tax return. Here it only sets the Balearic income limit: €33,000.00 individually or €52,800.00 jointly, inclusive. Allocate costs and carried-forward amounts yourself.

Explanation

The taxable base (base imponible) is your return's total taxable income base, not gross income or tax payable. It determines Balearic income eligibility. The preset is illustrative.

The technical limit is €10,000,000.00 per amount field; it is not a statutory grant ceiling.

possible deduction subject to sufficient tax and unused annual allowance

National base in the deduction yearDA 50ª.1–4 LIRPF
€5,000.00
National deduction 2026DA 50ª.1–3 LIRPF
€1,000.00
Balearic base for this tax periodArt. 3.2–4 DL 1/2014No eligible costs or unused base entered.
€0.00
Balearic deductionArt. 3.1 DL 1/2014No eligible costs or unused base entered.
€0.00
Total in the selected deduction year
€1,000.00
Eligible costs after grants and possible deductions – national reference
€29,000.00
Eligible costs after grants and possible deductions – Balearic referenceNo eligible costs or unused base entered.
€0.00

Cost references stay separate because the bases may overlap. National: new costs after grants plus unused carried-forward base, less all national deductions shown. Balearic: self-funded costs less the Balearic deduction. These are not a total project price.

This is a possible tax deduction, not a payment. National and regional tax are assessed separately; unused tax cannot be offset between them or carried forward merely because tax is insufficient. The calculator does not assess grant applications. A reduced VAT (IVA) rate may lower the invoice and is not added as a refund here.

Worked examples

The AEAT examples assume costs already allocated and unused allowances. The third example is an editorial illustration. AEAT

AEAT 2025: each spouse individually

Eligible payments – national: €6,000.00

possible deduction subject to sufficient tax and unused annual allowance

National deduction 2025
€3,000.00

AEAT 2025: joint return

Eligible payments – national: €12,000.00

possible deduction subject to sufficient tax and unused annual allowance

National deduction 2025
€3,000.00

Illustration: heating and cooling demand

Eligible payments – national: €30,000.00

possible deduction subject to sufficient tax and unused annual allowance

National deduction 2026
€1,000.00

Legal status: 31 March 2022

Sources

This calculation is provided for guidance only and is not a substitute for tax or legal advice in specific cases.

How much do you get back from a renovation?

Anyone who carries out an energy renovation on their property in Mallorca can deduct part of the costs from Spanish income tax (IRPF, Impuesto sobre la Renta de las Personas Físicas). The state provides three tiers for this, with 20%, 40% and 60% on capped amounts respectively, and the Balearics add a separate deduction of 50% on top. Which tier applies to your works and what's left in the end is calculated by the calculator above using your own figures.

How it's calculated

The calculation always follows the same order: first it's determined which of your expenses actually count, then any grant is deducted, the result is then reduced to the legal maximum base – and only this reduced amount is subject to the percentage. This distinction determines the outcome: it's the base that's capped, not the deduction. Anyone who spends more than the maximum base allows gets nothing for the excess amount, even if the percentage sounds high.

The three state tiers

Tier 1 — individual dwelling, lower heating and cooling demand

Deduction 20%, maximum base €5,000 per year.
Requirement: The energy performance certificate (certificado de eficiencia energética) after the works shows the combined heating and cooling demand at least 7% lower than the certificate before.

Tier 2 — individual dwelling, less primary energy

Deduction 40%, maximum base €7,500 per year.
Requirement: Non-renewable primary energy consumption falls by at least a third — or the certificate improves to class A or B. Either one is sufficient.

Tier 3 — entire residential building

Deduction 60%, maximum base €5,000 per year.
Requirement: For the building non-renewable primary energy consumption falls by at least a third — or the building improves to class A or B.

Level 3 is the building measure – typically decided by the owners' association (comunidad de propietarios) and allocated to the owners according to their participation quota. It also has an additional cumulative ceiling of €15,000 over all the years involved. Whatever exceeds the annual limit in one year is not lost: the remainder may be carried forward into the following 4 years, always within the same limits.

The Balearic deduction

Independently of this, the Balearics as an Autonomous Community (comunidad autónoma) grant their own deduction of 50% up to a maximum of €10,000 per tax period. It is tied to an income limit: for individual assessment, the tax base must not exceed €33,000, and for joint assessment €52,800. If the limit is exceeded, the regional part is lost entirely – the state part remains unaffected. The calculator checks both separately and shows you the total.

Worked examples

Three examples are built into the calculator, each showing the amount used and the resulting deduction in the deduction year. Two come from the official worked example of the Spanish tax administration on a building renovation: one for a married couple assessed separately, and one for the same renovation under a joint return. The difference between the two shows you why the maximum base applies per tax return. The third is an illustrative case for the first level. How a remainder is spread over the following years is calculated by the calculator above once you enter your own figures — the example cards themselves do not show this.

Special cases and common misconceptions

  • Invoices paid in cash are never deductible. Only what has flowed by bank transfer, card, or deposit into an account with a credit institution counts – traceable and documented.
  • Installations for fossil fuels are excluded. Anyone who replaces an old oil boiler with a new gas boiler gets nothing for that part, even if consumption falls.
  • Ancillary areas do not count towards the two housing levels. Garages, storage rooms, gardens, parks, swimming pools and sports facilities are excluded, even if they appear in the same purchase contract.
  • Parts of the home used for economic purposes do not count. Anyone who uses or lets a room as an office or practice must exclude that share.
  • The same work never triggers two levels at the same time. The levels are alternatives, not building blocks to be stacked. A measure is assigned to one level – not to three.
  • A grant reduces the base. Publicly funded amounts are not your own expenses; they are deducted before the cap applies.
  • Non-residents are not entitled to the deduction. It belongs to the income tax of those who are tax residents in Spain. Anyone declaring as a non-resident via Modelo 210 cannot claim it.
  • The deduction is not a grant.It reduces your tax – and this assumes there's enough tax to reduce. Without sufficient tax liability, it comes to nothing.

Deadlines and evidence

The most important and most frequently overlooked point: The deduction year is the year in which the energy certificate is issued after the works – not the year in which you paid. Anyone who pays in December and receives the certificate in January declares the deduction the following year.

Two energy certificates must be provided as evidence, one before and one after the works, each issued and entered in the relevant register in accordance with Real Decreto 390/2021. The certificate issued before the start of works may be no more than two years old at the time work begins; an old certificate from the purchase process is therefore rarely sufficient. What such a certificate costs and who is authorised to issue it is explained in the Guide to the energy certificate in Spain.

For the two dwelling-level tiers, payments must be made by 31 December 2026 and the certificate issued after the works before 1 January 2027. For the building-level tier, both deadlines are shifted by one year: payments by 31 December 2027, certificate before 1 January 2028.

Step by step

If your renovation requires a building permit, the municipal building tax (ICIO, Impuesto sobre Construcciones, Instalaciones y Obras) applies. Many municipalities reduce it for energy-efficiency measures – but only if you apply for the reduction together with the application, not afterwards. Whether your works require a building permit in Mallorca at all is best clarified in advance; how much the fee amounts to in your municipality can be calculated using this calculator:

Building tax (ICIO) and fee

Explanation

Choose your municipality. Its Ajuntament (town council) sets the rates in the ordenanza fiscal (local tax ordinance).

Explanation

Enter your PEM (presupuesto de ejecución material: direct construction costs). Exclude VAT, professional fees, the contractor’s profit and municipal fees. The preset is an editorial example.

Total municipal charges
€18,567.50
ICIO payable
€9,432.50
Municipal fee (tasa)
€9,135.00

Legal status: 31 October 2025

This calculation is provided for guidance only and is not a substitute for tax or legal advice in specific cases.

Full calculation

  1. Have the energy certificate issued and registered before the works. Without this baseline value, no later reduction can be proven.
  2. Ask the municipality whether it grants a reduction on the ICIO building tax (Impuesto sobre Construcciones, Instalaciones y Obras) for energy-efficiency measures. This is local law and varies from municipality to municipality.
  3. Apply for the building permit (licencia de obra) and submit the reduction application at the same time – it is usually no longer taken into account if submitted afterwards.
  4. Commission a certified company and pay everything by bank transfer, with the invoice made out in the name of the property owner.
  5. After completion, have the second energy certificate issued and registered.
  6. Claim the deduction in the tax return for the year in which this second certificate was issued.

Checklist

  • Energy certificate issued beforehand, no more than two years old at the start of works
  • Building permit and ICIO reduction application submitted together
  • Invoices from the certified company, with ancillary areas shown separately
  • Bank payment records, no cash payments
  • Notices of approved subsidies
  • Energy certificate issued afterwards, registered, with date
  • For building-level measures: resolution and cost-share allocation by the owners' association

Grants: what else is available

Direct grants are a separate route: application before starting, official decision, binding deadlines, proof of use. They have nothing to do with the tax deduction, except that they make it smaller. One requirement runs through all programmes: the building must be legal. Anyone who still needs to legalise an unauthorised extension is better off sorting that out before applying rather than afterwards.

The Balearic programme for energy renovation of buildings funded by NextGenerationEU has closed its application period; the funds are exhausted and new applications are no longer possible. For measures already approved, the completion deadline has been extended to 30 June 2028. The Govern publishes the current status at caib.es/sites/ibfonseu.

The calculator does not check grant applications. You enter an approved grant because it reduces the deduction base — not because the calculator could apply for it on your behalf.

Below its result, the calculator states a legal status date. This is not the date the text on this page was last edited, but the day on which the most recent of the values used came into force — currently the Balearic income limits. Older values remain valid unchanged; an older date therefore does not mean the page is outdated.

The state deduction is set out in the Disposición adicional quincuagésima of the Spanish income tax law, the Ley 35/2006. The Balearic deduction follows from Article 3 of the Decreto Legislativo 1/2014. The calculator itself shows you which legal status it is using for the calculation.

Frequently asked questions

Do I get the money paid out?
No. It's a deduction from income tax, not a grant. It only has an effect to the extent that tax is actually due, which it can reduce.
Can I use all three state tiers for the same renovation?
No. The tiers are alternatives. The same work is assigned to exactly one tier, never several at the same time.
Does the year of payment count, or the year of the energy certificate?
The year in which the energy certificate is issued after the works. Anyone who pays in December and receives the certificate in January declares the deduction the following year.
Am I allowed to pay the tradesmen in cash?
Not if you want the deduction. Only payments by bank transfer, card or deposit into an account are deductible.
I live in Germany and rent out the flat on Mallorca. Am I entitled to the deduction?
No. The deduction belongs to the income tax of those who are tax resident in Spain; anyone who files as a non-resident cannot claim it.
Does an approved grant reduce my deduction?
Yes. The grant is deducted from the expenses before the statutory maximum base applies. Enter it in the calculator, then you'll see the effect on your result.
Can I use the Balearic deduction in addition to the state one?
Yes, these are two separate deductions with their own requirements. The Balearic one is additionally tied to an income limit, which the calculator checks for you.

What comes after the renovation

An energy-renovated property costs less to run and is easier to rent out or sell; a good energy performance certificate is now an argument in price negotiations. If you're thinking about long-term rental in Mallorca after the works, it's worth checking the relevant guide — and anyone wanting to keep track of the overall tax impact will find the ongoing obligations under Taxes and Law. What a renovated property is worth on the market is shown by the current listings in Mallorca.

Two related topics that often come up alongside a renovation: registering a photovoltaic system and installing air conditioning or a heat pump. Everything on the property tax, which some municipalities reduce for renewable technology, is covered in the guide IBI tax in Spain. You'll find all topics related to building and renovating collected in the section overview.

What the local council requires for the building permit and how the ICIO building tax is calculated is worked out for you by the building licence fee and ICIO calculator, and if the renovation includes a photovoltaic system, it's worth taking a look beforehand at the cost-effectiveness of a solar installation in Mallorca. And if you're still at the very beginning and want to know what the work actually costs, you'll find the rough figures under the cost of a complete renovation in Mallorca.