ifac | 6% VAT for demolition and reconstruction permanently approved: what does this mean for you?

After years of temporary arrangements and uncertainty, the federal government has now permanently anchored the reduced 6% VAT for demolition and reconstruction into law. Since July 1, 2025, this favorable rate is no longer a temporary measure but a structural benefit for those looking to build or invest in new construction on the site of an old building. This is great news for prospective buyers, developers, and landlords alike.

What exactly does the new 6% regulation entail?

While the measure was previously mainly reserved for those building their own primary residence, it now fully benefits investors as well. Anyone who buys a property in a demolition and reconstruction project and subsequently places it on the rental market for at least 15 years can enjoy the reduced VAT rate. This applies to both social housing and the traditional private rental market. The condition is that the living area of the house does not exceed 175 square meters (up to 200 sqm for social projects).

When do you qualify for 6% VAT?

The regulation applies to new construction projects where the VAT becomes due as of July 1, 2025. This means the timing of invoicing or payment is decisive. The government aims to increase housing affordability and focus on renewing the aging housing stock.

Is this measure also interesting for investors?

Absolutely. Investors who rent out their purchased property for at least 15 years now enjoy the same tax benefits as a private buyer-builder. The combination of a permanently reduced VAT rate, a tight rental market, and attractive returns on new builds makes investing in demolition-and-reconstruction projects particularly interesting, especially now that there is long-term legal certainty.

What about surface area restrictions?

The surface area limit of 175 square meters applies to projects through a developer and for those renting on the private market. For social housing, this limit can go up to 200 square meters. The calculation is based on the usable floor area of the home.

How does IFAC Service help you?

At Ifac Service, we are noticing a growing interest in these types of projects. Thanks to our in-depth knowledge of regulations and market trends, we can guide our clients from the initial analysis to the final realization or sale. A tax benefit is only truly valuable if used correctly. Are you considering demolishing an existing building to replace it with a modern, energy-efficient home? Or are you an investor with an opportunity in mind? Feel free to contact us to review your plans together.