The macroeconomic effects of tax incentives for housing renovations: evidence from Italy

Tax incentives for housing renovations have become central instruments of climate and fiscal policy. Italy provides a unique case study to assess their effectiveness, as these measures were extensively leveraged during the Covid-19 recession. The Superbonus 110\% and the Facades Bonus were two generous and transferable tax credits for housing renovation, with a total cost of €186 billion (9\% of GDP). Using a synthetic control, we estimate the additional residential investment generated by these incentives. Results show that the programs stimulated €116 billion of investment, boosting the economic recovery; the remaining €70 billion financed non-additional projects, raising concerns about cost-effectiveness.