The French Minister of Territorial Cohesion and his Secretary of State unveiled the government’s housing program. It includes tax measures to encourage land divestitures and rental investment. These provisions should be included in the Finance Bill for 2018.
The Pinel and PTZ provision
The Pinel real estate scheme for rental investment, which was to be applied to investments made up to 31 December 2017, would be renewed until 31 December 2021. Investors could benefit from the tax reduction referred to in Article 199 of the French general tax code, if they acquire or cause to be constructed before that date new or assimilated housing intended for rental in the intermediate sector. The system would also be refocused on the dwellings in areas A, A bis and B1.
The subvention for home ownership in the form of zero-interest loans (PTZ) would also be extended for four years.
Exceptional allowance on capital gains on the sale of land
Capital gains realized by individuals on the transfer of building land in tense areas for the construction of new dwellings would benefit from an exceptional allowance.
The rate of abatement would vary according to the nature of the dwellings constructed:
- 100% for social housing,
- 85% for intermediate housing,
- 70% for free housing.
This allowance would apply in the event of the conclusion of a promise to sell before 31 December 2020.
Reduced tax rate on certain property sales
For companies subject to corporation tax, the application of the reduced 19% tax rate to net capital gains resulting from the sale of business premises to be converted into housing would be extended. This scheme, codified in Article 210 F of the French Tax Code, currently concerns transfers carried out before 31 December 2017 in favor of an assignee who undertakes to transform the premises (for industrial, commercial or office the four years following the closing date of the acquisition year.
The benefit of the reduced rate of 19% would also be extended to the capital gains resulting from the sale of building land for the construction of dwellings. It would apply in the event of the conclusion of a promise to sell before December 31, 2020.