Garages Purchased from an SGR: The Building Renovation Tax Deduction and the Notion of "Construction Company"

Article 16-bis(3) of the Italian Income Tax Code (TUIR) grants the purchaser of a property unit located in an entirely renovated building a tax deduction currently equal to 36% (50% in the case of a main residence) of 25% of the purchase price stated in the deed, up to a limit of EUR 96,000. Among other conditions, the provision requires the works to have been carried out by construction or building renovation companies, or by housing cooperatives. However, since the notion of "construction or building renovation company" is not specifically defined, significant litigation has arisen in recent years as to whether the deduction is available where the seller is an SGR (asset management company) acting on behalf of a real estate fund, or a SICAF (fixed-capital investment company).

Execution of the Works through a Contractor

The settled point is that the status of construction company is not lost if the works, rather than being carried out directly, are entrusted to a contractor. This scenario was specifically addressed and endorsed by the Italian Revenue Agency in Ruling No. 279/2019, which concerned paragraph 3 itself. The Italian Supreme Court reached the same conclusion in Order No. 17397/2025, in line with two earlier decisions from 2022: the provision requires the seller to be a construction or renovation company, but does not require that company to have carried out the works directly. A more restrictive reading would, by contrast, unjustifiably penalise those who, although able to operate on their own, choose to engage third-party contractors.

Qualification of the Seller: The Exclusion of SGRs and Funds

A separate, and far more debated, issue concerns which entities can qualify as construction companies.

In Ruling No. 141/2020, the Agency denied the deduction to a taxpayer who had purchased from an SGR acting on behalf of a closed-end fund, even though the works had actually been carried out by a third-party building contractor. The core of the reasoning was that the fund constitutes a pool of assets that is autonomous and separate from the management company, which sector regulations prevent from directly carrying on construction activities. According to the Agency, it follows that an SGR cannot be treated as equivalent to a building company.

The Italian Supreme Court also appears to follow this approach, albeit in a ruling on a different provision. Judgment No. 26928 of 7 October 2025 rejected the appeal of a SICAF claiming the fixed registration, mortgage and cadastral taxes provided for by Article 7 of Decree-Law No. 34/2019 for construction or renovation companies: what matters, the Court clarified, is not how the works are carried out but the very nature of the entity, which must have construction as the characterising object of its business, a requirement that a SICAF is barred by law from meeting.

However, a significant limitation should be noted, with due caution: based on the checks carried out, there is to date no Supreme Court decision specifically interpreting Article 16-bis(3) where the seller is an SGR. Judgment No. 26928/2025 concerns a different tax relief, which is why its extension to "purchase-related" deductions remains, for the time being, a position put forward in legal commentary.

The Garage Ruling: An Apparent Change of Course, to Be Examined Carefully

Against this background comes the recent Judgment No. 3313 of September 2026 of the First-Instance Tax Court of Milan (Section 17, single judge), the full text of which does not yet appear to be publicly available. The case concerns the disallowance, following a formal tax return check, of the deduction for the construction costs of an appurtenant parking space purchased from an SGR, which the Agency claimed did not qualify as a construction or renovation company.

The Tax Court upheld the taxpayer's appeal, holding that the subjective requirement relied upon by the Agency is laid down in paragraph 3 of Article 16-bis for works on entire buildings, but does not appear in letter (d) of paragraph 1, which concerns appurtenant garages and parking spaces: in the absence of an express provision, what matters for this category of works is only the construction of the facility, the appurtenance link and the documentation of the expenses, not the status of the seller.

At first reading, the ruling might seem to signal an opening compared with the restrictive approach just described. A closer examination, insofar as the only available press summary allows, nevertheless suggests tempering any optimism: the Milan judges did not hold that an SGR is a construction company and, indeed, expressly refrained from ruling on that point, which remains debated. The decision therefore operates on a different level from the interpretative conflict outlined above: it does not find that the subjective requirement is met, but that for garages that requirement does not apply in the first place.

Conclusions and Open Issues

Overall, the picture cannot be considered settled. The restrictive approach towards SGRs, funds and SICAFs is supported by the Agency's practice and, albeit indirectly, by Supreme Court Judgment No. 26928/2025, which, however, concerns a provision other than Article 16-bis(3): the Supreme Court has not yet ruled specifically on the latter.

For purchases of units in entirely renovated buildings, as well as for the purchase-related seismic risk reduction deduction ("sismabonus acquisti"), it is therefore prudent to continue taking the Agency's unfavourable position as the reference point, pending more settled developments. By contrast, those intending to purchase an appurtenant garage from an SGR may rely on the Milan ruling, but would be well advised not to regard it as definitive, pending any future judgments or further positions taken by the Italian Revenue Agency.