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Renovation Tax Calculator 2026: Subsidy vs. Tax Credit

Energy-efficient renovation in Germany — which funding option saves you more? Use this calculator to compare the KfW/BAFA subsidy (up to 70%) with the §35c tax credit (20% over 3 years). Enter your investment, select your bonuses, and instantly see which option is better for you.

Total cost including installation by a certified contractor

+20% when replacing a fossil heating system before 2028

+30% if household income is below €40,000

Energy-Efficient Renovation in Germany: Subsidy vs. Tax Credit

Homeowners renovating for energy efficiency in Germany face a key decision: KfW/BAFA subsidy or §35c EStG tax credit? Both options significantly reduce costs — but they cannot be combined for the same measure.

Option A: KfW/BAFA Subsidy (BEG Program)

The Federal Subsidy for Efficient Buildings (BEG) offers grants for individual energy-efficiency measures. The subsidy rate consists of:

  • Base rate: 30% — applies to all eligible measures
  • Speed bonus: +20% — when replacing a fossil heating system before 2028
  • Income bonus: +30% — for households with income below €40,000

The total subsidy rate is capped at 70%. The subsidy is paid out directly — no waiting for your tax return.

More info: KfW — BEG Individual Measures

Option B: §35c EStG — Tax Credit

Alternatively, you can deduct 20% of renovation costs (up to €200,000 investment) directly from your tax bill — spread over 3 years:

  • Year 1: 7% of costs
  • Year 2: 7% of costs
  • Year 3: 6% of costs

Important: This is a tax credit (Steuerermäßigung), not a deduction from taxable income. The amount is subtracted directly from your tax bill. No KfW application required — just a certificate from the contractor.

Legal basis: §35c EStG

Why Not Both?

German law explicitly prohibits double funding. For the same measure on the same property, you can only use one option. However, for different measures on the same building, you may choose different funding paths.

When Is Each Option Better?

The KfW subsidy is usually the better choice because:

  • The grant is paid immediately (not spread over 3 years)
  • The subsidy rate can reach up to 70% with bonuses
  • No minimum tax liability required

The §35c tax credit may be better when:

  • You don't qualify for speed or income bonuses (only 30% subsidy rate)
  • You want to skip the KfW application process
  • Your tax liability is high enough to fully use the credit

Related: Depreciation Calculator

📖 Related Article

KfW subsidy or §35c tax bonus? Compare both renovation support paths in Germany.

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This calculator compares options for ONE renovation measure. Restio tracks all your renovation costs, depreciation, and tax benefits automatically — across multiple years.

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Frequently Asked Questions

Can I use both the KfW subsidy AND the §35c tax deduction? ▼

No. For the same renovation measure, you must choose one or the other. However, for different measures on the same property, you can mix — e.g., subsidy for the heat pump, tax deduction for the windows.

Which option is usually better? ▼

The KfW subsidy is better for most people because it's paid out immediately and can reach up to 70% with bonuses. The §35c tax deduction (20% over 3 years) can be attractive for smaller projects where you don't qualify for bonuses and want to skip the KfW application process.

What if my tax bill is too low for the full §35c benefit? ▼

The §35c is a direct tax credit — it reduces your tax bill. If your tax liability in a given year is lower than the credit amount, the excess is lost. Make sure your annual income tax is at least as high as the yearly credit amount.

Does §35c work for rental properties? ▼

No. The §35c tax deduction only applies to owner-occupied residential properties that are at least 10 years old. For rental properties, you can deduct renovation costs as income-related expenses or use accelerated depreciation (§7h/§7i EStG).

What qualifies as energy-efficient renovation? ▼

Eligible measures include: thermal insulation (roof, walls, basement ceiling), window and door replacement, heating system upgrades (e.g., heat pumps), ventilation systems, and optimization of existing heating systems. The work must be carried out and certified by a qualified contractor.