According to the Spanish Tax Agency (AEAT), renovation and repair works on a home can be taxed at the reduced 10% VAT rate when the client is a private individual using the home privately, the building was completed at least two years before the works start, and materials supplied by the contractor do not exceed 40 per cent of the taxable base. A home that is let out does not qualify. Grant programmes and income-tax deductions change frequently; as of November 2026 several have expired or been repealed, so each must be checked at the time. We show VAT separately and state the materials cost so your adviser can check eligibility; we do not manage grant applications.
How does VAT appear on a Spanish renovation quote?
VAT in Spain is called IVA (Impuesto sobre el Valor Añadido). On a builder’s quote it normally appears as a separate line after the base total, with the rate stated. Some quotes simply carry the note “IVA no incluido”, meaning the tax will be added to the total shown. When you compare two quotes, the first thing to check is whether both totals are before or after VAT, and at which rate.
There are two rates that matter for renovation work. The general rate of 21% applies by default; the AEAT uses it, for example, for repairs on a home that the owner lets out. The reduced rate of 10% applies to renovation and repair works on dwellings when specific conditions are met. The difference is significant enough that it is worth understanding the conditions before signing.
The builder applies the rate on the invoice, but the conditions depend on you and your property. That is why a builder will ask how the home is used before deciding which rate to apply.
What conditions does the AEAT set for the reduced rate?
The AEAT’s page on renovation or repair works on dwellings, last updated on 13 October 2026 and checked by us on 5 November 2026, lists these conditions:
- The recipient must be a natural person — an individual, not a company.
- The home must be for the recipient’s own private use. If it is leased out or used for any business or professional activity, even part-time, the reduced rate does not apply.
- The building must have been completed (or last rehabilitated) at least two years before the works start.
- Materials supplied by the contractor must not exceed 40 per cent of the taxable base of the job.
The AEAT’s frequently asked questions add that “materials supplied” means all physical goods that become incorporated into the building during the works, not the tools and equipment the contractor uses, and that the invoice must state the cost of the materials supplied. Whether owners’ communities can also benefit, and what written statement the client should give the contractor, are points to be verified with a tax adviser for your case.
Does the reduced rate apply to holiday lets and second homes?
For a home that is let, the AEAT is explicit: when the owner lets the property, the repairs are taxed at the general 21% rate, because the home is used for letting and not for the owner’s private use. Its page on renovation works adds that any business or professional use, even part-time, rules out the reduced rate. Many foreign owners on the Costa del Sol let their apartment for part of the year; on the AEAT’s wording, that use is likely to rule out the reduced rate (how part-year holiday letting is treated in a specific case: to be verified with a tax adviser).
For a second home used only privately by its owner, the AEAT conditions do not mention residency, so a non-resident individual using the home privately is not excluded by the wording we have checked. Your tax adviser should confirm this for your situation (to be verified).
For commercial premises, such as a shop or office, the reduced residential rate does not apply; see shop fit-out cost.
Why does the materials share matter for your quote?
The 40 per cent materials condition links VAT to the structure of the quote. If the contractor supplies expensive tiles, sanitaryware and kitchen units, the materials share rises; if you buy some of them yourself, it falls. The AEAT gives an example of a flooring job where materials supplied by the contractor are below the limit, and the whole job is then taxed at the reduced rate.
This is one reason we show materials clearly in each line of our quotes and state their cost on the invoice, as the AEAT requires. If you plan to supply part of the materials yourself, tell us before the quote: it changes the lines from “supply and fit” to “fit only” and may affect the VAT position. Do not reorganise a project purely to fit the threshold without advice — your adviser can tell you whether it is worth it. Our itemised quote page shows how materials are described line by line.
Which income-tax deductions exist for home improvements, and are they still open?
Spain has offered personal income tax (IRPF) deductions for works that improve the energy efficiency of homes. According to the AEAT’s practical IRPF manual for tax year 2025, checked on 5 November 2026, there are three such deductions. For the first two — works that reduce heating and cooling demand, and works that reduce non-renewable primary energy consumption — an extension to 31 December 2026 had been introduced by Royal Decree-law 16/2025, but the manual states that it was repealed by the Resolution of 27 January 2026. The manual confirms that these two deductions apply for tax year 2025.
The third deduction, for energy rehabilitation of residential buildings, is stated as applicable in 2025. Whether any of these deductions applies to works carried out in late 2026 is to be verified at the time, as the legal position has changed several times. These deductions also rely on energy performance certificates issued by a qualified technician (details to be verified on the AEAT page). We do not issue energy certificates.
What grants are available in Andalusia?
In recent years, the main grants for housing rehabilitation in Andalusia came from programmes funded by the EU recovery plan (Plan de Recuperación, Transformación y Resiliencia) and managed by the Junta de Andalucía. They focused on energy efficiency in homes and on rehabilitation at building level, usually requested by the owners’ community rather than by individual owners for interior works.
As an example of where these programmes stand, the Official Gazette of Andalusia (BOJA) of 9 June 2026 published a resolution extending the execution deadline of certain building-level rehabilitation actions (Línea 3) from the 2022 call to 31 December 2026. That resolution extends deadlines for existing beneficiaries; it does not open a new call.
Whether a new call is open for your type of work, your municipality and your situation is to be verified at the moment you plan the works. Purely interior finishes — new floors, a new kitchen, smoothing walls — are not the focus of the energy-efficiency and building-level programmes described above (eligibility under any specific call: to be verified).
What do we do, and what is up to you or your adviser?
Our part is to give you a clear quote: VAT on its own line, the rate applied, and materials described in each line with their cost stated on the invoice. Before applying a reduced rate, we ask how the home is used and when the building was completed.
What we do not do: we do not give tax advice, prepare energy certificates, or manage grant or deduction applications. For those, speak to a tax adviser (asesor fiscal or gestor) and, where certificates are needed, a qualified technician. If you are comparing several quotes, check that all of them apply the same VAT rate before comparing totals — our guide on comparing quotes explains how. For a broader view of costs, see cost factors and how much a renovation costs in 2026.
Official sources
- AEAT – What rate applies to works on dwellings? Renovation or repair (page updated 13 October 2026, checked 5 November 2026)
- AEAT – Preguntas frecuentes sobre obras y reparaciones en inmuebles (checked 5 November 2026)
- AEAT – Manual práctico IRPF 2025: deducciones por obras de mejora de la eficiencia energética de viviendas (checked 5 November 2026)
- BOJA núm. 109 of 9 June 2026 – extension of execution deadlines, Línea 3 building-level rehabilitation (checked 5 November 2026)
Bauman Raymond Attila · Presupuesto Reforma · Avenida Antonio Belón 3, Marbella. Last reviewed: 05/11/2026.
