THE ADVANTAGES OF NEW PROPERTY
Investing in NEW PROPERTY presents SEVERAL ADVANTAGES:
› reduced notaries’ fees
› guarantees which cover your property
› optimised floor space
› tax advantages
› energy efficiency
› technical quality and services compliant with NF standards
› comfort and quality for you
› personalisation of your property
› comfort and quality for all
› advantageous financing
REDUCED NOTARIES’ FEES
For newly built property, notaries’ fees are reduced and are only 2 % to 3 % of the sale price, compared with 7 % to 8 % for existing property.
GUARANTEES FOR NEW PROPERTY (ten-year guarantee, perfect completion guarantee, external completion guarantee…)
Buying a new property, i.e. off-plan, is regulated and protected by multiple guarantees. When you buy a property off-plan (VEFA – literally “sale of a property for future completion”), you become owner before the property is built and delivered. These are the guarantees from which you will benefit, and which should help you in your decision:
• Full completion guarantee (La garantie de fin d'achèvement)
This is obligatory and obliges the developer to continue the building works until the property is fully built. This guarantee is issued by a banking or financial establishment, who must ensure completion and delivery of the property in the event of failure by the developer.
• Perfect completion guarantee (La garantie du parfait achèvement)
This covers you in the event of any defect or failure by the developer, which the works manager may observe during the first year after delivery of the property. The guarantee obliges the developer to repair the apparent defects.
• Two-year guarantee
This is an insurance policy, taken out by all the contractors concerned, covering all the construction equipment (plumbing, electricity, ducts, floor and wall coverings, doors and windows…) for two years. It is completed by the ten-year guarantee, to provide total cover for all the elements of the property on delivery.
• Ten-year guarantee
This guarantee lasts for ten years and concerns all the defects which could endanger the solidity of the building structure (foundations, walls, roof, air and water proofing…) or which could make the building unsuitable for its purpose. It does not concern the aesthetic elements.
TAX ADVANTAGES
New property provides tax advantages compared with existing property. You can reduce your tax payable thanks to tax-saving measures such as the “Pinel law”.
ENERGY EFFICIENCY
Living in a newly built programme enables you to benefit from the latest energy efficiency regulations. Optimised orientation of the building, certification labels…
COMFORT AND QUALITY FOR YOU
Living in a new property means being assured of your well-being: living spaces and optimised internal volumes, a balcony/terrace.
PERSONALISATION OF YOUR PROPERTY
Investing in new property enables you to personalise your decoration in advance and avoid works after delivery. Thus, you can choose the colours and materials which suit you.
COMFORT AND QUALITY FOR ALL
The comfort and quality extend beyond the private section with communal spaces adapted for disabled persons, lifts complying with the latest standards, one or several parking spaces…
ADVANTAGEOUS FINANCING
Financing new property enables the buyers to benefit from several financial advantages:
› Zero-rate loans, enabling you to finance part of your purchase with a subsidised loan, subject to income conditions.
› Reduced acquisition costs: notaries’ fees between 2 and 3 % for the purchase of newly built property, compared with 7 to 8 % for existing property.
› Exemption from land tax for the first two tax years as from completion of the works (partial or total depending on the Commune).
THE FRENCH STATE HELPS YOU BUY THE PROPERTY
THE ZERO-RATE LOAN(3)
This is reserved for first-time buyers. It only finances the purchase of a first property to be used as a main home. It is granted subject to income conditions. The zero-rate loan encourages buyers to become the owner of a property respecting the RT2012 standard(2).
The amount of the zero-rate loan, the repayment duration and the maximum cost of the operation vary depending on the purchase price of the property, the taxable income Y-2 of the buyers, the family situation and the location of the purchase. For example, low-income families may benefit from longer repayment durations. The maximum amount of the financeable operation will increase in proportion with the number of persons who make up the household.
The main advantages:
• Up to 40 % of the amount to be financed for the property purchase (for properties in zones A, A bis and B1).
• A repayment duration from 20 to 25 years depending on the case, comprising 2 periods:
1) The deferment period, during which you do not repay the zero-rate loan (this period, depending on your income, may be 5, 10 or 15 years).
2) The loan repayment period, following the deferment period, varies from 10 to 15 years.
The zero-rate loan is like a free advance from the State without interest or arrangement fees.
The zero-rate loan has a particular advantage: it is recognised by banks as forming part of your personal contribution to the purchase. The zero-rate loan is granted by banks approved by the State. The borrowers remain free to choose another bank for their main loan if they wish.
As from 1 January 2018, the measure has been extended for 4 years on the same terms for zones A, A bis and B1. For properties in zones B2 and C, the zero-rate loan is maintained until 2020 and may finance up to 20 % of your project.
THE PINEL LAW(4)
This is a measure created by the French State to enable income tax reductions when becoming owner of a buy-to-let property. The Pinel law is very close to the Duflot law in its workings and conditions: Pinel - rent ceilings, tenant income ceilings, ceilings per m² and eligible zones.
• Who is eligible?
All French tax payers resident in France and paying their tax in France may benefit from the provisions of the Pinel law to reduce their tax.
• Conditions to benefit from the Pinel measures:
The 2016 Pinel law was adopted in December with retroactive effect as from 1 September 2014 except for lettings to ascendants and descendants which only apply as from 1 January 2015 (2016 Pinel measure adopted in the 2015 Finance Law LF-2015). It is subject to these conditions: income conditions for tenants, Pinel 2018 rent ceilings, conditions concerning the type of property, time periods for the building and completion, energy and environmental standards and finally the zones eligible for the Pinel law. The Pinel measures have been renewed for 4 years as from 1 January 2018, but concentrated on the so called “tight” (i.e. high rent) zones: zone A , A bis and B1.
• Advantages linked to the Pinel law:
The Pinel reduction rate can reach 21 %
The Pinel law is above all a tax saving measure which offers a tax advantage to every French tax payer who wants to invest in a new property and who undertakes to let it for a minimum of 6 years with possible extensions of twice 3 years, i.e. a duration of 9 years or a maximum duration of 12 years.
Obviously the longer the duration the greater the tax saving.
The reduction rate is proportional to the duration of the letting commitment.
The tax reduction is 12 % of the invested amount over 6 years.
The tax reduction is 18 % of the invested amount over 9 years.
The tax reduction is 21 % of the invested amount over 12 years.
The Pinel law also allows you to make 2 purchases maximum per year.
For example, for a € 300 000 investment over 12 years, the total tax saving is € 63 000 i.e. € 6 000 per year for 9 years and € 3 000 per year for the extra 3 years; or for a € 200 000 investment over 6 years, the tax saving is € 24 000 i.e. € 4 000 per year for 6 years only.
Other advantages of the Pinel law
The Pinel law is an excellent way of buying your property without a personal contribution because banks are more likely to lend for a project supported by the government and which carries a lower risk than other property or financial investments.
It is an effortless way of starting to create wealth thanks to tax savings or increasing your wealth if you are already a property owner.
It will enable you to plan for your retirement and, if you have children, for their future. And it is a way of protecting your family against life’s hazards.
Sources : loipinel-gouv.org
Rent ceiling conditions
| Rent ceiling per m² | |
|---|---|
| Zone A bis | € 16,96 |
| Zone A | € 12,59 |
| Zone B1 | € 10,15 |
N.B.: Although the rents required to benefit from the tax advantage must not exceed the above ceilings, it should be noted that ANAH (French national housing improvement agency), or according to the case their representative, may approve lower rents for the conclusion of an agreement. For further information please contact the ADIL (departmental housing information agency) of your department.
Income conditions
| Annual income ceilings for leases concluded or renewed in 2018 (reference - taxable income for 2016, mainland France) | ||||
|---|---|---|---|---|
| Tenant household composition | Zone A bis | Zone A | Zone B1 | |
| Single person | € 37 508 | € 37 508 | € 30 572 | |
| Couple | € 56 058 | € 56 058 | € 40 826 | |
| Single person or couple with 1 dependant | € 73 486 | € 67 386 | € 49 097 | |
| Single person or couple with 2 dependants | € 87 737 | € 80 716 | € 59 270 | |
| Single person or couple with 3 dependants | € 104 390 | € 95 553 | € 69 725 | |
| Single person or couple with 4 dependants | € 117 466 | € 107 527 | € 78 579 | |
| Increase per extra dependant from the fifth | + € 13 087 | + € 11 981 | + € 8 766 | |
Source: www.anil.org
The Pinel law enables buyers to benefit from a tax reduction, as provided in article 199 (29th addition) of the French general tax code, for the purchase of a residential property, situated in certain geographical zones (Zone A, A bis and B1) depending on the energy efficiency of the building, intended for letting for a minimum of 6 years at a capped rent and to tenants who are subject to income ceilings (the tenant may be an ascendant or descendant of the owner providing they are not part of the same tax household). The tax reduction is 12 % (for 6 years letting), 18 % (for 9 years letting) or 21 % (for 12 years letting) of the purchase price of the property concerned, within a price limit of € 5 500/m² and is limited to € 300 000 per year (and to 2 properties bought per year maximum).
The tax reductions represent a maximum reduction respectively of € 36 000 for 6 years and € 54 000 for 9 years (i.e.€ 6v000 p.a.) per tax payer, in the framework of an annual ceiling for tax advantages of € 10 000. If the letting continues, for a maximum duration of 3 years, once, for an initial commitment of 9 years i.e. 12 years: the tax reduction is then equal to 3 % of the cost price of the property for this period i.e. a total of 21 % for the whole letting period representing a maximum reduction of € 63 000. This tax reduction is taken into account for the calculation of the overall ceiling for certain tax advantages mentioned in 200-0 A of the general tax code.
A property investment carries risks, notably in the event of absence of letting, unpaid rents or absence of tenants. Failure to respect the letting obligation causes the loss of the benefit of the tax reduction. Any delay in completing the purchase and/or in the delivery schedule may give rise to the loss of the benefit of the tax reduction.
Details and conditions are available at our sales point. Detailed conditions are available on www.service-public.fr or www.cohesion-territoires.gouv.fr.
