Rehabilitation Works Excluded
One of the main clarifications from the Federal Revenue Service concerns the covered projects. According to the Tax Authority, the refund applies to construction contracts for properties intended for primary and permanent residence, including cases where construction is preceded by the complete demolition of an existing building.

Rehabilitation, remodeling, expansion, or renovation works on existing properties are excluded from this regime.

The Tax Authority considers as rehabilitation works all projects carried out on a previously built property that is not subject to total demolition.

This means that an owner who wishes to renovate or expand an existing house cannot request a partial VAT refund, even if the property is intended for primary and permanent residence.

However, this clarification does not alter another tax benefit already provided for by law. In many cases, rehabilitation projects can continue to benefit from the application of the reduced VAT rate of 6%, provided they meet the legally established requirements. What is excluded is only the new mechanism for partial tax refund.
Demolition to build may grant access to the benefit
The circular also clarifies a situation that had generated doubts.

When a house is completely demolished to make way for the construction of a new dwelling, the operation may qualify for the partial VAT refund scheme, provided it meets the other legal requirements.

In these cases, the costs of demolition and debris removal are included in the calculation of the total cost of the operation, used to verify whether the property respects the maximum limit for access to the benefit.

However, these expenses do not, in themselves, entitle the owner to a VAT refund. They only serve to determine whether the overall value of the construction remains within the so-called "moderate price" limit, currently set at €660,982, excluding VAT.

Conversely, taxes such as ITBI or IOF paid on the purchase of the land are not included in this calculation. Learn more: Clarification of 6% VAT on rehabilitation works approved in the specialty
Purchasing materials does not entitle you to a refund
Another clarification now published concerns eligible expenses. The refund applies only to VAT incurred on construction works carried out by a contractor.

The isolated purchase of construction materials by the owner, even if they are subsequently incorporated into the construction work, does not entitle them to a tax refund.

Even so, these expenses remain relevant to determine the total cost of construction and to verify whether the property complies with the maximum limit stipulated by law.

Who can benefit?
The scheme is intended exclusively for individuals who do not operate within the scope of a business or professional activity and who build a dwelling intended for their own permanent residence.

In addition to respecting the maximum limit of €660,982 (the "moderate value" defined by the Government), the property must be used as a primary and permanent residence within six months of the issuance of the documentation relating to the start of its use and maintain this use for at least 12 months.

If the property is rented out or ceases to meet the other legal requirements during this period, the Federal Revenue Service may demand the return of the refunded amount, plus the respective interest.

The request is made on the Finance Portal
The refund request must be submitted exclusively through the "Refunds Other VAT Regimes" application, available on the Finance Portal.

The taxpayer has 12 months after the issuance of the documentation relating to the start of the use of the property to file the request, which must be accompanied by the construction contracts, invoices and other documents required by law.

For properties whose documentation relating to the start of use was issued during the first half of 2026, applications can only be submitted from October 1, 2026, which is also the date from which the deadline for requesting a refund begins.

After being duly prepared, the process must be analyzed by the Federal Revenue Service, which has a maximum period of 150 days to make the refund.
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