Tax Deduction for Thermomodernization Step by Step

Taxpayers can deduct in their PIT declaration the so-called thermomodernization relief. In 2020, taxpayers can deduct up to 53,000 PLN in expenses related to the thermomodernization of a building.

Entities that can benefit from the thermomodernization relief

The relief is granted to an entity that is the owner or co-owner of a single-family residential building, taxing its income based on a flat tax rate of 19% or according to the tax scale or a lump sum on recorded income.

A single-family building is a free-standing house that, in terms of its construction, constitutes a separate whole and can have a maximum of 2 premises or 1 residential unit and 1 commercial unit with an area not exceeding 30% of the total area of the building.

For example:

If a taxpayer owns a house with an area of 150 m2, and 30 m2 of that area is allocated for a shop, they can benefit from the relief, as the commercial unit occupies 25% of the total area of the building. If the same taxpayer owns multiple properties, the limit for that person is cumulative, and they can deduct a maximum of 53,000 PLN. The statutory limit is not tied to a specific investment, but to a specific taxpayer. In the case of spouses owning properties under joint ownership – each person can deduct a maximum of 53,000 PLN, increasing the limit double compared to the limit for one taxpayer.

Filling in the PIT - Thermomodernization Relief

It will be necessary to fill in the PIT/O. The PIT/O attachment is not a standalone tax declaration, but must be submitted along with the PIT form. Taxpayers should remember that the PIT/O form can be submitted along with the PIT-28, PIT-28S, PIT-36, PIT-36S, PIT-36L, PIT-36LS, and PIT-37 declarations. To facilitate the deduction of the relief, the new version of the PIT/O has a line titled “Expenses for the implementation of the thermomodernization project”, where you can enter an amount up to 53,000 PLN for a period of a maximum of 3 years counted from the end of the year in which the taxpayer started the thermomodernization investment.

Spouses who file jointly under PIT-36 or PIT-37 fill out one joint PIT/O attachment. If they file separately, each spouse fills out the attachment for themselves in a separate declaration. The amount of the deduction should be covered by the annual income of each taxpayer. If a situation arises where the income is lower than the expenses, it can be deducted in subsequent years, although not longer than for 6 years from the year in which the first expense was incurred.

For example:

If a taxpayer incurred costs for the purchase of a photovoltaic installation in 2019 amounting to 35,000 PLN, and their income was 30,000 PLN, while the rest was financed from savings, they can deduct a maximum of 30,000 PLN in the PIT form for 2019, and the remaining amount will be deducted in PIT forms in the subsequent maximum 6 years.

Conditions for deducting the thermomodernization relief

The following conditions must be met to deduct the thermomodernization relief:

• Starting the thermomodernization project.
• Purchasing goods and services in accordance with the list regulated by the regulation;
• Purchasing only from taxpayers registered as VAT payers, and presenting invoices paid personally in the settlement.
• Deductions of expenses on an ongoing basis, i.e., separately for each calendar year in the PIT.
• Completion of the implemented investment within a maximum of 3 years, counted from the date of the first incurred expense.
• Settling only real expenses incurred (for example, costs of funding obtained from NFOŚiGW, such as costs of participating in the "My Electricity" program cannot be deducted).

What can you deduct in the thermomodernization relief?

You can deduct specific actions and types of products in the relief, as specified in the regulation of the Minister of Investments and Development of December 21, 2018, regarding the determination of the list of types of building materials, devices, and services related to the implementation of thermomodernization projects. There are 15 types of building materials and devices and 16 types of services listed.