Renovating property in France is what expats do! We love to upgrade, restore and make old buildings worthy again from barns to chateaux – but did you know that certain home improvements can result in significant income tax gains?
Jo-Ann Howell takes a look at just what tax relief and benefits are available to home owners in France who want to renovate…
Work on your French home that is (partially) reimbursed by the tax man…
It’s not just income tax where you can end up better off by renovating. On top of that, there are also funds and 0% interest loan structures available to French residents to enable them to carry out the works on their primary residence even when their budget is restricted.
Of course, there are certain rules and regulations to be respected, so read on to see if any of your planned renovations can be partially reimbursed on next year’s income tax bill, and if you may be eligible for assisted funding.
2016 Home Improvements with Tax Benefits
France is conscious of the need to improve its environmental footprint, and as such all home improvements with tax benefits are designed to improve the energy efficiency of your home.
Properties & People who are Eligible
The property eligible for tax credits on works carried out must be your primary residence, and the building must have been completed for more than 2 years, and both owners and rental tenants are eligible.
Works that are Eligible
- The purchase of thermal insulation materials for at least half of the glass walls in the house.
- The purchase and installation of thermal insulation materials for at least half of the external walls of the house.
- The purchase and installation of thermal insulation material for the insulation of the whole roof.
- The purchase or replacement of boilers and other heating or hot water production equipment running on wood or other biomasses
- The purchase of hot water production equipment that runs on renewable energy.
- The purchase of condensing boilers or energy production equipment using a renewable energy source.
- The installation of individual meters for heating and hot water in apartment blocks and cohabited buildings
- The installation of charging stations for electric vehicles.
Since January 1st 2015, only companies boasting the RGE label – Reconnu Garant de l’Environnement : Recognised Guarantor of the Environment, are qualified to carry out the works in your home and satisfy the requirements for tax credits.
To find RGE professionals near you, consult the government website: http://www.renovation-info-service.gouv.fr/trouvez-un-professionnel By entering your Postcode, Town, your distance from the Town centre and the type of work you are planning, you will have a list of recognized companies to approach. It is always advisable to get more than one quote and an obligation for the company if the cost of works exceeds 150€.
Speaking of costs, let’s get to the good part – what you can get back!
Note that there are limits to spending that also need to be respected:
Over a 5 year period, a single person can spend up to 8,000€ on eligible home improvements, and a couple can spend 16,000€. Any dependents add 400€ to the available envelope, so for example a single Mum with 2 children can spend 8.800€ on improving the energy efficiency of her home.
Tax credits are calculated at 30% of the full invoice for works carried out, inclusive of VAT at 5.5%. Although VAT for works carried out on your primary residence is already charged at a reduced rate of 10%, works for energy efficiency improvement benefit from an additional reduction.
So if having the roof insulated by an RGE firm costs 2,800€ including VAT, the tax credit entitlement is 840€ the following year, and the single Mum with 2 dependents above still has a budget of 6,000€ to spend over the next 5 years.
Declaring the Works to get the Tax Credits
The French impôts do not withhold money that is owed to you; if my single Mum’s household revenue means she does not pay any tax then next year she can expect a cheque from the tax man for the 840€ credit earned this year.
To get that cheque, Mum had to declare the 2,800€ she paid in the corresponding section of her supplementary tax declaration for environmental quality of the home, using form 2042 QE.
What if you need financial help to improve the energy efficiency of your home?
The 0% Eco-loan – Eco-PTZ – is a government subsidized loan available to any individual wishing to improve the energy efficiency of their primary residence, regardless of their income level.
Application for the Eco-PTZ is made via a financial loan institution, including some banks, and must be accompanied by a detailed quote from the RGE firm who will carry out the works, or their invoice if works are already completed. Note: works must be completed within 3 years of application for the Eco-PTZ.
So there you have it; the what, how and when’s on improving the economic footprint of your home with the help of the French tax man.
By Jo-Ann Howell at French Admin Ssolutions