Tax incentives to modernize the energy efficiency of the housing in Spain

This paper analyzes the tax incentives and aids adopted in the taxes and environmental policies to improve the energy efficiency of Spanish households. The established environmental policy presents advances although with incipient results, since the energy efficiency of the houses still plays a secondary role. In the area of taxes, no tax incentives have been effective in reducing the investment in improvements in the energy efficiency of homes, especially in those of old construction. Our conclusions indicate the convenience of promoting the energy efficiency of homes through the fiscal route. In this sense, it proposes incorporating an incentive to the Personal Income Tax linked to improved energy rating of housing. Also, it raises the improvements in the current regulations on tax benefits on the Real Estate Tax and on the Tax on Building, Installations and Infrastructural Work. These are two of the main features of this paper. •This paper analyzes the tax policy directed to improve energy efficiency in private housing.•The analysis shows that tax benefits are insufficient to promote energy efficiency.•There are only two tax benefits related to improving energy efficiency in private housing.•The facultative nature of these benefits makes it more complicated for everyone to benefit from them.•We propose introducing two fiscal measures to promote energy efficiency in private housing.