Under the "Denormandie" scheme, older buildings are given a new lease of life. They get a thorough facelift that allows them to compete with new real estate!
Operation seduction for older buildings, which can be renovated at very attractive conditions. The Denormandie solution, which applies to the 222 localities covered by the "Action Cœur de Ville" program, is the perfect way to spruce up your property stock. There's no need to let cracks, dirt or wear and tear show, as the scheme aims to renovate buildings from top to bottom. They have all the advantages of new buildings, while retaining the charm of the old. And with new ambitions in mind, since the properties are intended for rental and offer excellent tax exemption. Here's a dazzling renovation!
GOOD REASONS TO INVEST IN OLDER HOMES
The Denormandie scheme encourages the acquisition and renovation of older properties for rental. Provided that 25% of the total cost of the project is met, the Denormandie scheme allows a tax reduction of up to 21% of the investment!
Target areas
The Denormandie scheme is only effective in certain areas! It applies exclusively to the "Action Cœur de Ville" program. How can we be sure that properties are covered?
Since January 1, 2019, landlords have been eligible for tax savings when they renovate a property located in a run-down older district. This applies to the 222 communes in the "Action cœur de ville" plan and others that have signed an operation to revitalize the area. Medium-sized towns that may suffer from a lack of attractiveness, where the renovation of the housing stock will encourage new residents to move in. In Aurillac, Blois, Rochefort and Grasse, almost a quarter of the population lives in these medium-sized towns.
Work to be undertaken
To bring these somewhat outdated buildings back to life, a whole range of work needs to be undertaken. Which renovation projects should you be prepared for? Find out with this detailed checklist.
Naturally, to give your property the facelift it's been hoping for, the work must focus on improving energy performance, insulation or heating equipment. Eligible operations must result in :
- a 30% improvement in energy performance;
- the replacement of a boiler or hot water production system, and insulation of attics, walls and windows.
If the property is more than two years old, the VAT rate of 10%, or even 5.5% for energy renovation work, applies.
The cost of the work must represent 25% of the total cost of the operation. For the purchase of a home costing €160,000, the renovation must amount to €40,000. However, the ceiling on eligible expenditure is limited to purchases of up to €300,000.
GOOD PROFITABILITY
With advantageous purchase prices per square meter in medium-sized towns, around €1,500/m2, and low interest rates, less than 1% over 15 years, the Denormandie investment promises a handsome net return. To calculate this, simply perform the following operation:
Annual rental income - (Charges + Work)/Purchase price of the property x 100
Conditions to be met
Renovation work must be carried out in accordance with certain guidelines. What rules must be met to benefit from the Denormandie scheme?
In addition to the work, which must represent 25% of the total cost of the project, the owner must commit to renting out the property within certain limits. These ceilings correspond to "intermediate" rents, and are based on zones A / B / C, which characterize the tightness of the housing market.
The rents to be respected therefore correspond to the following values for each zone:
Housing zone Rent/m2
A bis16,96 €
Rest of zone A12,59 €
B110,15 €
B2 and C8,82 €
Benefits to look forward to
With its new look, the building can attract new occupants. What conditions must be met to rent out a property without losing out on tax relief?
To ensure that these properties are accessible to as many people as possible, tenants must meet certain income ceilings. Amounts vary according to household composition, as shown in the examples below:
Zone Single personCouple Couple and 2 children
A bis37 508 €56 058 €87 737 €
Rest of zone A €37,50856 058 € 80 716 €
B130 572 €40 826 €59 270 €
B2 and C27 515 €36 743 €53 344 €
Once you've invested and found the right tenants, you can reap the rewards of your Denormandie investment. This concerns the tax reduction, which is calculated on the total cost of the operation, according to the length of the rental period. This represents a tax saving of :
- 12% for 6 years,
- 18% for 9 years,
- 21% for 12 years.
Example: the tax reduction for an investment of €200,000 over 9 years, as for the Pinel scheme, is :
200,000 * 18% = 36,000 €, or 4,000 € per year.
WHERE TO INVEST IN DENORMANDIE?
The scheme covers 222 towns throughout France, all of which have set themselves the goal of improving their attractiveness and promoting economic development.
Christophe RAFFAILLAC