Who qualifies: the building, owner occupation, the measures and the specialist firm

A married couple has the windows of their detached house replaced in spring 2026 for €24,000 and expects a tax reduction of €4,800 in total over three years. The tax office refuses: construction of the house had begun only nine years and ten months before the installation. Two months later, the very same invoice would have carried the full relief.

The qualifying property: a building you own and live in

§ 35c EStG grants a tax reduction for energy-efficiency measures on a building the taxpayer owns and lives in. The statute calls this building the qualifying property. Its location has to be within the EU or the EEA, so an owner-occupied house in Austria can qualify just as a house in Leipzig can.

The relief is neither a grant nor a deduction from income. On application it directly reduces the tariff income tax, and it does so after the other tax reductions have been subtracted. Anyone who owes no income tax in a given year has nothing in that year from which the reduction could be taken.

Paragraph 5 extends the rules to owner-occupied flats held as condominium units and to parts of a building that are separate immovable assets. The owner of a flat in an apartment block can therefore use the reduction as well, insofar as the expenses relate to her flat and the other conditions are met.

Older than ten years, measured from the start of construction

Paragraph 1 sentence 2 requires the property to be older than ten years when the energy-efficiency measure is carried out. What counts is neither the move-in date nor completion, but the start of construction. A house whose construction began in summer 2016 therefore reaches the threshold only in summer 2026, even if the family moved in in 2018.

The rule is thus aimed at the existing housing stock. For new and recently built houses, § 35c offers no relief, however much energy a retrofit would save. Owners of a young house who want to renovate anyway should first check the date construction began and, where possible, schedule the work after the ten-year threshold.

§ 52(35a) EStG defines when a measure itself starts. If the measure needs a building permit, the start is the day the permit application is filed. For projects that only have to be notified to the authority, it is the day the notification is received, and for projects exempt from any procedure it is the day building work starts.

Exclusively your own home, in every year of the relief

Paragraph 2 sets an often overlooked condition: the building must be used exclusively as the taxpayer's home in the calendar year concerned. The words in the year concerned matter because the reduction is spread over three years. Owner occupation must therefore exist not only in the year of completion but in every year for which an instalment is claimed.

Under paragraph 2 sentence 2, it does no harm if parts of the home are given to other people to live in free of charge. A room for a student daughter or a mother in need of care living rent-free in the house does not change the owner's own use. It is different as soon as rent is agreed.

If the family moves out in the second year and lets the house, exclusive owner occupation is missing for that year. On the wording, the reduction then lapses for every year in which the condition is not met. Anyone planning a move should therefore time the completion of the renovation with the three relief years in mind.

Letting itself is not a case for § 35c. For a let building, energy-efficiency work is generally an income-related expense, either as maintenance deductible at once or as construction cost written off through depreciation. How that distinction works is explained in the course on rental income; the second module shows how the two routes exclude each other.

Eight groups of qualifying measures

Paragraph 1 sentence 3 lists exhaustively what counts as an energy-efficiency measure. Work that falls into none of these groups receives no relief, even if it saves energy. Conversely, belonging to a group is not enough on its own, because each group is tied to technical minimum requirements laid down in a statutory ordinance.

• thermal insulation of walls
• thermal insulation of roof surfaces
• thermal insulation of storey ceilings
• replacement of windows or external doors
• replacement or installation of a ventilation system
• replacement of the heating system
• installation of digital systems for energy-related operation and consumption optimisation
• optimisation of existing heating systems more than two years old

Under sentence 4, the expenses also include the cost of the certificate and the fees of an energy consultant, provided the consultant is approved by the Federal Office for Economic Affairs and Export Control for residential energy advice and has been hired to plan or supervise the work. A separate rate applies to the consultant, explained in the second module.

Under sentence 5, the relief can be claimed for several individual measures on the same property. An owner who insulates the roof in 2026 and replaces the heating in 2028 can claim both, each with its own three-year spread. All measures together, however, share the cap per property.

The minimum requirements of the ESanMV

Paragraph 7 empowers the federal government to lay down minimum requirements for the measures and for specialist firms by ordinance. That ordinance is the Energetische Sanierungsmaßnahmen-Verordnung, ESanMV for short. Its § 1 assigns an annex to each of the eight groups, from wall insulation in Annex 1 to the optimisation of heating systems in Annex 8.

§ 1 ESanMV also defines which costs belong to a measure: professional fitting or installation, commissioning of systems, necessary ancillary work and the material costs directly connected with the measure. Unlike the trade-work relief of § 35a, material is therefore included here.

For the building envelope, the annexes work with maximum values for the thermal transmittance, the U-value. The smaller it is, the less heat escapes through the component. Under Annex 1, an insulated external wall may reach at most 0.20 W/(m²K); under Annex 2, a pitched roof surface may reach at most 0.14 W/(m²K).

For listed buildings and other building fabric worth preserving, the annexes set their own, less strict values, for windows for instance 1.4 instead of 0.95 W/(m²K). The envelope annexes also require a check of minimum moisture protection and airtight work low in thermal bridges. These checks belong to the firm's contract, not to the tax return.

Heating: renewable, metered, balanced

Annex 6 governs the replacement of the heating system and is the most detailed. Across the board it requires, among other things, a heat-load calculation, metering of consumption and heat produced, hydraulic balancing under method B and a heating curve adapted to the building. Without this work, even a new system does not qualify.

Qualifying systems are mainly solar thermal collectors, certain biomass boilers, electrically driven heat pumps, fuel cells and connection to a building or district heating network. For biomass heating, heat pumps and fuel cells, the dwellings supplied must be heated at least 65 percent from renewable energy after the measure.

Two exclusions matter especially for owners. Systems that generate only electricity, such as a photovoltaic installation, are not covered by Annex 6; their tax treatment is covered in the course on photovoltaics. And in areas where connection to a heat network is compulsory, only the connection to that network qualifies, not a separate heating system of one's own.

For air-to-water heat pumps, Annex 6 contains a tightening that applies in 2026: since 1 January 2026, the outdoor unit must stay at least 10 dB below the European noise limits instead of 5 dB before. From 1 January 2028, newly installed heat pumps must also use natural refrigerants.

Annex 8 concerns the optimisation of a heating system more than two years old, for instance hydraulic balancing, high-efficiency pumps, presettable thermostatic valves or insulating uninsulated pipes. It expressly excludes installing or replacing heat or power generators; a new boiler is therefore a matter for Annex 6.

Only a specialist firm makes the measure eligible

Sentence 6 makes the relief conditional on a specialist firm having carried out the measure concerned. Do-it-yourself work is therefore excluded, even if the material was fitted properly. § 2 ESanMV defines the specialist firm by the trades in which it operates and lists nineteen of them.

They include, among others, masonry and concrete work, plastering, painting, carpentry and joinery, insulation work, roofing, plumbing, glazing, installers and heating engineers, electrical engineering, metalwork, roller-shutter technology and chimney sweeps. Commercial businesses specialising in window fitting also count as specialist firms.

Belonging to a trade does not stretch indefinitely, though. The measure carried out must belong to the firm's own trade. A painting business that installs a heat pump does not meet this condition, even though it is a specialist firm as such. What counts is the pairing of firm and work.

Under § 2(2) ESanMV, the certificate may also be issued by a person authorised to issue certificates under § 88 of the Buildings Energy Act. This requires that a specialist firm carried out the measure within its trade and that this person was entrusted with planning or supervising the measure.

Before awarding the contract, it is therefore worth asking in which trade the firm works and whether it issues the certificate on the official form. A general contractor who passes work to subcontractors should set out which specialist firm carries out which measure, so that each piece of work can be matched to its trade.

The time window: started after 2019, completed before 2030

§ 35c does not apply without limit. Under § 52(35a) EStG, it applies to measures whose execution began after 31 December 2019 and that are completed before 1 January 2030. In line with this, the ordinance expires under its § 4 at the end of 31 December 2029.

For planning from 2026, this means that completion before the turn of 2029 to 2030 is decisive. A measure completed in December 2029 carries the full spread over 2029, 2030 and 2031. If it is only finished in January 2030, it falls outside the relief on the wording as read.

Which version of the ordinance applies is set by its § 3. The version as read applies for the first time to the 2025 assessment period and covers measures begun after 31 December 2024. For measures begun earlier, an older version applied, which this course has not read and therefore does not reproduce.