Real Estate Renovation and Taxation: The Secrets of the Denormandie Law for a Successful Investment
- Excellium Patrimoine
- Apr 11
- 3 min read
Updated: Apr 13
The Denormandie Law : An Attractive Scheme
The Denormandie Law, introduced in 2019, aims to boost investment in older real estate through an attractive tax incentive scheme. It allows investors to purchase an older property in selected mid-sized towns for renovation, while benefiting from a significant tax reduction. This law follows in the footsteps of the Pinel Law but places a particular emphasis on the rehabilitation of France’s architectural heritage.
What is the Denormandie Law ?
The Denormandie scheme is designed for investors who wish to purchase an older property in certain municipalities and then carry out renovation work. The eligible cities are those located in so-called "revitalized" areas, such as medium-sized cities, to help revitalize the local real estate market and improve the quality of life.
In return for this investment, the government offers a tax reduction of up to 21% of the amount invested, calculated on the purchase price and renovation costs. This reduction is spread over a period of 6, 9, or 12 years, depending on the rental duration of the property.
The Advantages of the Denormandie Law
Attractive Tax Reduction : The main advantage of the scheme is the tax reduction, which can reach up to 21% of the total investment amount (purchase price + renovation work). This percentage varies depending on the rental period of the property: 12% for a 6-year period, 18% for 9 years, and 21% for 12 years. This allows investors to quickly make their investment profitable.
A Niche Real Estate Market : Unlike other schemes such as the Pinel Law, which mainly applies to new housing, the Denormandie Law targets older properties. It helps address the need for renovation of many properties in medium-sized towns, which are often neglected or in a state requiring major work.
Enhancing Local Heritage : By rehabilitating old properties, investors directly contribute to the revitalization of neighborhoods and the preservation of French real estate heritage. Additionally, by renovating these homes, they become more modern, energy-efficient, and compliant with current standards.
Possibility of Renting at Moderate Rates Rents are capped under the Denormandie Law, allowing investors to offer affordable housing in areas that often suffer from a shortage of rental properties. It's an excellent way to support housing accessibility in certain towns while optimizing investment returns.
Investment Opportunity in Developing Areas : The cities and towns eligible for the scheme are often developing areas with long-term value potential. Investing in these regions allows one to benefit from local revitalization efforts and the likely increase in property values over the years.
Why Go Through a Professional ?
Although the Denormandie scheme offers undeniable advantages, its implementation is not always straightforward. There are several reasons why it is highly recommended to work with a professional to maximize the chances of a successful investment.
Expertise in Property Selection : A real estate professional can help you select the best properties in eligible areas. They can identify the most promising neighborhoods, urban revitalization zones, and guide you toward properties with high potential for value appreciation after renovation.
Support with Administrative and Tax Procedures :The Denormandie Law involves numerous administrative steps to be fully eligible for tax reductions. An expert can assist you throughout these procedures, ensuring that your project complies with all the necessary conditions to benefit from the tax advantages.
Renovation Supervision : Renovation is a central element of the Denormandie Law. A professional can advise you on the work to be done in terms of profitability, compliance with environmental standards, and material quality. They can also oversee the proper execution of the work and help you avoid unpleasant surprises.
Investment Optimization : By working with an expert, you can optimize your return by choosing the right features and anticipating costs. Additionally, a professional can guide you toward the best financing options for your project, including low-interest loans or energy renovation subsidies.
Time-Saving and Peace of Mind : Hiring a professional helps you avoid many hassles and saves valuable time. Thanks to their network and experience, they can manage the complex stages of the project on your behalf, saving you precious time while securing your investment.
Conclusion
The Denormandie Law offers an attractive tax framework for those looking to invest in older real estate while contributing to housing renovation and the revitalization of mid-sized towns. However, to fully benefit from this scheme, it is essential to work with qualified professionals who can guide you through every step of the process—from purchase to renovation, including all administrative procedures. This ensures not only the project's compliance with legal requirements but also its long-term success.
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