DUFLOT 2 investment in La Baule-Escoublac

The Duflot 2 law is a new tax exemption scheme for the purchase of a new home or a home in a future state of completion between 1 January 2013 and 31 December 2016.
This new tax-free rental investment scheme offers a tax reduction rather than a reduction in taxable income. The Duflot scheme can result in tax savings of up to €6,000 a year for 9 years.

The maximum reduction over 9 years is therefore €54,000.

More specifically, the tax reduction rate is 18% of the purchase price of the property for 9 years for all investments in mainland France. In Overseas France, the rate is 29% of the purchase price.
This tax reduction is more advantageous than the previous Scellier classic scheme (13% over 9 years) and the Scellier intermediate scheme (17% over 12 years and 21% over 15 years).
The purchase price of the property (or properties) is limited to €300,000, with a maximum purchase ceiling of €5,500 per square metre.
Note that this new tax allowance is subject to the €10,000 ceiling for all tax allowances.

Conditions for qualifying for the Duflot 2 tax relief scheme:

- Rents must be capped at 20% below the market rental rate,

- The purchaser must be a French tax resident,

- A maximum of two properties can be purchased per year,

- The property must be used as the tenant's principal residence no later than the year of acquisition or completion,

- The property must meet specific energy standards,

- The owner must undertake to let the property to anyone who is not a member of his or her tax household. It is not possible to rent to an ascendant or descendant.

- The property must be located in one of the four geographical zones eligible for the Duflot scheme (zones A, Abis, B1 and B2). The rent will be capped according to the zone in which the property is located. La Baule-Escoublac is located in zone B1.

More generally:
Zone A: the inner suburbs and 2nd suburbs of the Paris region, Côte d'Azur, French Genevois.
Zone A bis: Paris and its immediate suburbs.
Zone B1: urban areas with more than 250,000 inhabitants, the outer suburbs of Paris, Annecy, Bayonne, Chambéry, Cluses, La Rochelle, Saint-Malo, the Côte d'Azur, French overseas departments and Corsica,
Zone B2 (subject to prefectoral approval for each commune): conurbations with more than 50,000 inhabitants, expensive border or coastal areas, and the outskirts of Ile de France.

- Application of the scheme depends on the tenant's income.

For example, for 2013:

In La Baule-Escoublac, if the tenant is a couple with no dependants, their annual income must not exceed €39,731 to qualify for the Duflot tax exemption scheme.

It should be remembered that the surface area to be taken into account when calculating the rent is the living area plus half of any annexes (cellar, balcony, etc.) up to a maximum of 8m².
For 2013, the rent ceilings are as follows:
Zone A bis: €16.52 / Zone A: €12.27 / Zone B1: €9.88 /Zone B2: €8.59.

These ceilings then vary according to the surface area of the property, taking into account a multiplying coefficient of 0.7 + 19 / surface area of the property. This coefficient is then rounded off to the second decimal place and may not exceed 1.2.
It is possible for the owner to let the property to a public or private organisation, which will sublet it for residential (unfurnished) rental purposes. However, under no circumstances may this public or private organisation offer hotel or hotel-like services. Only a subsidiary of the private or public body may provide such services, provided that the two leases signed comply with the rent ceilings.
The scheme will lapse if any of these conditions (rental period, ceilings, etc.) are not met, unless the taxpayer, or one of the spouses in the case of joint taxation, is made redundant, becomes disabled or dies.