French General Tax Code
In forceI. - Taxpayers domiciled in France within the meaning of l'article 4 B benefit from an income tax reduction for the expenses they incur for the complete restoration of a built building:
1° - Located in a remarkable heritage site classified under Title III of Book VI of the Heritage Code:
a) Either when the building is located within the perimeter of this site covered by an approved safeguarding and enhancement plan;
b) Or when the building is located within the perimeter of this site covered by an approved architecture and heritage enhancement plan;
c) Or, failing this, when the restoration of the building has been declared to be in the public interest pursuant to Article L. 313-4 of the town planning code;
2° - until 31 December 2023, located in a run-down old quarter delimited pursuant to Article 25 of Law no. 2009-323 of 25 March 2009 on mobilisation for housing and the fight against exclusion when the restoration has been declared to be in the public interest ;
2° bis - Until 31 December 2023, located in a district with a high concentration of run-down old housing and covered by a multi-year agreement provided for in article 10-3 of law no. 2003-710 of 1 August 2003 on town planning and urban renewal, where the restoration has been declared to be in the public interest. The ministers in charge of cities and culture draw up the list of neighbourhoods with a high concentration of run-down old housing, on the proposal of the National Agency for Urban Renewal;
3° (Repealed);
4° (Repealed).
The tax reduction applies to expenditure incurred for residential premises or for premises intended after work for residential use or for premises allocated for a use other than residential use that were not originally intended for residential use and for which the rental income is taxed in the property income category.
It does not apply to expenditure relating to buildings where the right of ownership is dismembered or to expenditure relating to buildings belonging to a company not subject to corporation tax where the right of ownership of the shares is dismembered.
II. - The expenditure mentioned in I refers to the costs listed in a, a bis, b, b bis, c and e of 1° of I of article 31, the costs of joining urban restoration land associations, as well as the costs of work imposed or authorised in application of the legislative or regulatory provisions relating to the sites or districts mentioned in 1° to 2° bis of I of this article, borne either from the date of issue of the building permit, or from the expiry of the period for objecting to the prior declaration, and until 31 December of the third year thereafter. Where applicable, this period is extended by the period during which work is interrupted or slowed down in application of articles L. 531-14 to L. 531-15 du code du patrimoine or by the effect of force majeure.
Also entitled to the tax reduction is the fraction of the provisions paid by the owner for co-ownership work expenses and for the amount actually used by the co-ownership trustee to pay said expenses.
When the work expenditure is carried out under a contract for the sale of a building to be renovated provided for in Article L. 262-1 du code de la construction et de l'habitation, the amount of expenditure giving entitlement to the tax reduction, under the conditions and within the limits set out in this article, is that corresponding to the price of the work to be carried out by the vendor and actually paid for by the purchaser in accordance with the schedule set out in the contract.
II bis. - In respect of a period between the date of issue of the building permit or expiry of the time limit for objecting to the prior declaration and 31 December of the third year thereafter, where applicable extended under the conditions of the first paragraph of II, the amount of expenditure giving entitlement to the tax reduction may not exceed the sum of €400,000.
III. - The tax reduction is equal to 22% of the amount of the expenditure mentioned in II, retained within the limit provided for in II bis.
This rate is increased to 30% when the expenditure is incurred on properties mentioned in a of 1° or in 2° or 2° bis of I.
III bis. - The tax reduction is granted in respect of the year of payment of the expenditure mentioned in II and deducted from the tax due in respect of that same year.
When the fraction of the tax reduction deductible in respect of a tax year exceeds the tax due by the taxpayer in respect of that same year, the balance may be deducted from the income tax due in respect of the following three years.
IV. - Where the expenditure relates to premises used for residential purposes, the owner undertakes to rent the premises free of charge as the tenant's principal residence for a period of nine years. Where the expenditure relates to premises used for purposes other than residential purposes, the owner undertakes to rent them out for the same period.
The rental agreement may not be entered into with a member of the taxpayer's tax household, an ascendant or descendant of the taxpayer or, if the property is owned by a company not subject to corporation tax, to one of its partners or a member of its tax household, an ascendant or descendant of a partner. The partners in the company undertake to hold their shares until the end of the rental commitment.
The rental must take effect within twelve months of completion of the work.
IV bis. - 1. The tax reduction is applicable, under the same conditions, in respect of the subscription by taxpayers of units in non-trading property investment companies governed by Articles L. 214-114 et seq. of the Monetary and Financial Code whose share of income is, pursuant to Article 8 of this Code, subject on their behalf to income tax in the property income category.
The tax reduction, which does not apply to shares in which the ownership right is stripped, is subject to the condition that at least 65% of the subscription amount is used exclusively to finance the expenses mentioned in II and at least 30% is used exclusively to finance the acquisition of properties mentioned in I. The proceeds of the subscription must be used in full within eighteen months of closing.
2. The tax reduction is equal to 22% of the amount of the subscription allocated to financing the expenditure mentioned in II, up to a limit of €400,000 over a period of four consecutive years. This rate is increased to 30% when the amount of the subscription is allocated to financing expenditure relating to a building mentioned in a of 1° or in 2° or 2° bis of I.
3. The company must undertake to let the property in respect of which the expenditure is incurred in accordance with the conditions set out in IV. The shareholder must undertake to retain ownership of his shares until the end of the rental commitment entered into by the company.
4. The tax reduction is granted in respect of the year in which the subscription referred to in 1 is made and deducted from the tax due in respect of that same year. Where the fraction of the tax reduction that can be deducted in respect of a tax year exceeds the tax owed by the taxpayer in respect of that same year, the balance may be deducted from the income tax owed in respect of the following three years.
V. - A taxpayer may not, for the same premises or the same share subscription, benefit at the same time from one of the tax reductions provided for in articles 199 decies E to 199 decies G, 199 decies I or 199 undecies A and the provisions of this article.
When the taxpayer benefits for the expenses mentioned in I from the tax reduction provided for in this article, the corresponding expenses may not be subject to any deduction for the determination of property income.
V bis. - The total amount of expenditure retained for the application of this article in respect of, on the one hand, the carrying out of the expenditure mentioned in II and, on the other hand, the amount of the subscription to units in non-trading property investment companies allocated to the financing of the expenditure mentioned in II, may not exceed a total of €400,000 per taxpayer and for a period of four consecutive years.
VI. - The tax reduction obtained is subject to reversal in respect of the year during which:
1° One of the commitments mentioned in IV or IV bis is broken. However, no write-back is made if this breach occurs as a result of disability corresponding to classification in the second or third of the categories provided for in article L. 341-4 of the Social Security Code, following redundancy or the death of the taxpayer or one of the members of the couple subject to joint taxation;
2° The dismemberment of the right of ownership of the property concerned or the shares. However, this right is not called into question when the dismemberment of this right or the transfer of ownership of the property results from the death of one of the members of the couple subject to joint taxation and the surviving spouse who is allocated the property or holds its usufruct undertakes to respect the commitments provided for in IV, under the same terms and conditions, for the period remaining at the date of death.
VII. - A decree shall specify, as necessary, the terms and conditions for the application of this article.
VIII. - (Repealed).
