Roche & Cie

Real estate taxation in France: the novelties of 2018

19 Jan 2018

The new finance law, voted recently, improves many real estate schemes with the aim of encouraging investment.

Let’s take stock of the major real estate reforms that will be implemented in France from January 2018.


Discounts and Tax Credits

Pinel tax scheme

For your information, the Pinel scheme allows private individuals to benefit from income tax reductions provided they invest in the acquisition or construction of new homes for rent. The scheme is extended for another four years and will continue until 2021.

Note, however, that the scheme is redefined and refocused on dwellings located in zone A, A bis and B1, which correspond to real estate tense zones. This new zoning concerns acquisitions made on or after January 1, 2018, and housing projects whose application for a building permit was filed on the same date.


Censi-Bouvard scheme

The Censi-Bouvard tax scheme offers an income tax reduction for people who acquire new properties in order to rent them to dedicated structures such as student residences, seniors’ residences or residences for handicapped persons. This plan is extended for one year and will expire on December 31, 2018.


CITE (Energy Transition Tax Credit)

As Sandy Dalmas mentioned in her last information note, the CITE is renewed for another year, until 31 December 2018. This income tax credit is granted for the improvement of energy quality of housing.

However, as of January 1, 2018, several equipment no longer qualify for this tax benefit. This is particularly the case for high energy efficiency boilers running on fuel oil. For more information, see our January 2018 news brief.


PTZ (Zero Rate Loan)

The scheme is renewed for four years, and will extend until December 31, 2021.

It should be noted however that the offers of loans issued in 2018 will be for housing in old buildings located in zones B2 and C.

Those issued in 2020 will concern new homes located in zones A and B1.


Abatement on the plus value

In order to encourage real estate investment, an allowance is introduced for gains on the sale of building land and properties built in areas of tension (A and A bis).

Remember that this advantage is only granted if the buyer undertakes to demolish existing buildings to rebuild collective housing. Additionally, this reconstruction must be completed within 4 years from the date of acquisition.

The rate of reduction is 70% or 85% in the case of a construction of social or intermediate housing applicable to the net tax base.


Housing tax

Starting in 2018, a tax rebate on the principal residence will be applied to taxpayers whose reference taxable income for the year preceding the year for which the tax is established does not exceed € 28,000 for the first part of the family quotient, plus € 8,500 for each of the following two half-shares, then € 6,000 for each additional half-share.

In principle, the rate of relief is equal to 30% in 2018, 65% in 2019 and 100% in 2020.

But beware, this rate decreases for taxpayers whose RFR exceeds 27,000 € for the first part of family quotient, plus 8,000 € for each of the two half-parts following, then 6,000 € for each additional half-share.

Cabinet Roche & Cie, English speaking accountant in Lyon, France.
Specialist in Real-Estate and Non-resident taxation.