You've decided to have your house built, and you've planned your budget, but did you know that there are tax schemes to help you reduce the bill or even think bigger? Polimmo La Maison gives you an overview of the main tax schemes and their advantages for building a new home in France.
The Zero rate loan or PTZ
The PTZ is particularly aimed at first-time buyers. This interest-free loan is applied for in addition to another loan to buy or build a principal residence. It is subject to a maximum income.
The amount of the PTZ depends on the area in which you are buying or building. It is paid for by the State and does not charge any interest, interest on arrears, appraisal fees or administration costs.
The repayment period (20 to 25 years) depends on a number of factors:
- your income (the higher your income, the shorter the repayment period)
- the total cost of the operation to be financed
- the number of people who will be living in the property concerned
- the zone in which the property concerned is located.
How do I apply for a PTZ? You need to apply to a financial institution that has signed an agreement with the government, which will assess your borrowing capacity and guarantees.
The Action Logement Accession Loan
This loan was previously known as the 1% Logement loan. Action Logement is an organisation that finances the construction of housing and provides housing subsidies to employees. To qualify for this reduced-rate loan (1.5% excluding compulsory insurance) of up to €40,000, you must :
- be an employee of a non-agricultural private sector company with at least 10 employees
- not to exceed a certain income ceiling
- early repayment of any other outstanding Action Logement loans relating to the principal residence
The property must be built in mainland France or the French overseas departments and territories, and comply with certain regulations (thermal, acoustic, ventilation, etc. depending on the location).
The term of the loan is free but must not exceed 25 years.
The loan application must be made on the Action Logement website.
The Home Savings Loan (PEL)
This loan is available to holders of a Plan Epargne Logement (PEL) for at least 4 years, and is used in particular for building new homes. Its characteristics depend on the date you opened your PEL: interest rate, eligible expenses, whether or not a bonus is paid, etc. You should apply in principle to the bank where you opened your Plan Epargne Logement, and the maximum loan amount is €92,000. It runs for between 2 and 15 years, and can be repaid early.
Finally, the interest rate on a Prêt Épargne Logement is a maximum of 4.20%, but depends on the date the Plan Épargne Logement is opened.
The Social Access Loan
Reserved for people on modest incomes, it enables you to become the owner of your principal residence by having it built. Note: the income requirements for obtaining this loan vary according to the location of the building and the number of occupants in the future home. There is no ceiling on the interest rate for this loan.
The PAS can be applied for from a credit institution that has signed an agreement with the government. The rate can be variable, fixed or adjustable, and the term can be between 5 and 30 years.
What are the advantages? The notary's fees are reduced, there is a ceiling on processing fees, and the guarantee must be exempt from land registration tax. What's more, it can finance the entire building project, and can be supplemented by other loans (with the exception of a conventional mortgage).
As you can see, there are many ways to help you make ends meet when building a new home. Some of them can even add up.
Looking for personalised advice? Consult an industry professional like Polimmo La Maison,
and ask your bank for more information, as there are many other tax schemes available.
to make your building project a reality!