While it was due to end on December 31, 2023, “Denormandie” was extended by three years. Little known to real estate investors, this tax system is nevertheless very attractive. To benefit from it, you must buy housing in poor condition in one of the 250 eligible municipalities – the list is available here -, then renovate it and rent it out. The work, carried out by a company, must represent at least 25% of the total cost of the operation, that is to say the acquisition price to which are added the transfer rights, the agency fees and the rehabilitation. The refurbished accommodation must then be rented bare, as a main residence, at a rent capped depending on the area, and to households meeting resource conditions, the same as those in Pinel.
Please note, to obtain the tax advantage, the lessor must undertake work which improves the overall energy performance diagnosis (DPE) of the accommodation by at least 30% – or 20% in co-ownership – with, at the end of the process, a label between A and E. Or implement at least two types of work from a list of five – insulation, heating replacement, etc. – or even create new living space. The envelope can be supplemented by additional renovations, such as the renovation of a bathroom, to bring the property up to date.
Not all cities are equal
If all these obligations are respected, the owner benefits from a tax reduction of 12, 18 or 21% of the cost of the operation, for respectively six, nine or twelve years of rental. This tax advantage is capped at 5,500 euros per square meter and 300,000 euros per year, and it falls within the tax loophole ceiling of 10,000 euros per year.
If you are looking to invest in stone, Denormandie offers great opportunities. Especially since today, the negotiation margins on “thermal strainers” are high, on average 20 to 25%. Be careful, however, not to go in with your eyes closed, because not all “normandable” cities are of the same interest. Some, like Douai, Laon, Morlaix, Saint-Dizier, Saint-Omer, Thiers or Vichy, experience low rental tension and long-term capital gains are hardly guaranteed. On the other hand, other municipalities on the list record very strong rental demand, an essential condition for a successful operation. So choose cities like Bayonne, Cherbourg-en-Cotentin, Colmar, Dreux, Dunkirk, Evry, Fontainebleau, Quimper, Rambouillet, Saint-Malo or Vannes.