The mortgage for renovation, unlike the mortgage for purchase and the mortgage for liquidity, is a type of mortgage very simple to obtain and is required for all interventions that can be made on a building (both internally and externally).
It is mainly required to invest in the development of service rooms, centralized systems, hygiene or architecture of buildings.
What are the loans for restructuring aimed at?
There are three types of works that can be used for this mortgage:
- Ordinary maintenance (small works): it is understood that the building disconnection is not necessary and consequently that no taxes have to be paid to the municipality for this type of maintenance (the responsibilities for safety, hygiene and fixtures are totally post by who does the job). Ordinary maintenance are those that are carried out on an existing building to which components are added or some functions are returned. We are talking about adding grates, renovating roofs, adding parking spaces on the ground floor or renovating facades.
- Extraordinary maintenance (small works): concerns the replacement, renewal or consolidation of a structure. To start doing this type of work, a start and project report is required. It is of fundamental importance that the shape, appearance and function of the building is maintained.
- Renovation of major works: for this type of work, building disconcession is necessary and therefore taxes must be paid according to the surface used. It refers to a renovation that concerns an entire building, which is totally transformed, then the role of the property is changed, the appearance, the dimensions or the shape and substantial additions are made (such as for example an expansion or construction of non- pertinent parking lots (= parking lots to be sold / rented later).
This is a particular mortgage, as the bank does not pay everything together (this is a guarantee from both the bank and the person who does the job).
Instead the installments that the applicant must initially pay are those that must cover the cost of interest.
The end of the works and the amortization of the interest must take place simultaneously and this can cause a misalignment with the mortgage installments; This problem is solved by taking out a new adaptation mortgage.
Tax breaks on the mortgage
There are some tax breaks for mortgages that were applied for after 1997:
- 19% of interest expense, accessory charges and revaluation quotas are deductible from tax.
- In 10 years, 36% of expenses can be deducted from IRPEF in the case of renovation, energy saving and safety. The deduction can take place in 5 years if the applicant is over 75 years old, or in 3 years if the applicant is 80 years old.
- As for VAT, this drops to 10% (instead of 20%) on significant goods, such as boilers or elevators.
Mortgage for construction
This mortgage is linked to the mortgage for renovation, but it is much more difficult to get the building has not yet been built the mortgage value is very low and is risky for the bank.
Before applying for this loan it is better to start the work with your own money in order to increase the value of the mortgage.
Mortgage for completion
It is connected to the two previous mortgages and this type of mortgage was designed for those who intend to buy a house under construction (therefore with the works not yet completed).