RATE OF TAX CREDIT

RENTAL INVESTMENT : THE SCELLIER SCHEME

The new tax incentive scheme to encourage investment in rental property called the « SCELLIER LAW », was launched in France on 1st january 2009.

On 1st january 2010 this tax reduction scheme will replace all the other schemes for a period of 3 years (until 2012).

• Since the 1st january 2009 until the 31 december 2010, the scheme allows the opportunity to claim a tax reduction equivalent to 25 % of the property purchase price for 9 years (on purchases up to 300 000 €). The investor could claim up to 75 000 € on investments made before the 31st december 2010, regardless of the marginal rate of tax.

During these 9 years of renting, the rent you can charge for your property depends on a maximum limit calculated on the basis of the location of the property (Robien maximum limit) and not the tenant's income.

• From the 1st january 2011 untill the end 2012, the tax cut will be reduced to 13% of purchase price in 2011 and 9% in 2012.
• Housings that meet the conditions for the award of the label B.B.C (Building Low Energy Consumption) will benefit from an increased rate. Consequently, for 2011 for these housings, the rate of tax reduction will be 22% and 18% for 2012.

When you rent under the Borloo tax reduction legislation :

• the tenant's income and the rental amount must be within the maximum limit allowed (the tenant must not be one of you direct familly),
• a 30% allowance can be granted on the taxable rental income,
• Moreover, if the property is still rented at the end of the 9 years period, in the same conditions, the taxpayer can extend the commitment up to 6 years to gain an additional annual tax reduction equivalent to 2 % of the original cost of the property.

THE GEOGRAPHIC ZONING

The application of this new device is reserved for homes located in zones 1, 2 et 3 corresponding to zones A, B1 and B2 zoning established for the purposes of depreciation «Robien» and «Borloo».

Investments in zone C can not benefit from the new tax cut.

COMMITMENT

The investor agrees to rent housing for a principal residential use for a minimum of 9 years.

THE BASIS OF CALCULATION

The tax cut is calculated on the purchase price of housing in the limit of 300 000 €.

The amount of the acquisition is not capped and is not subject to capped price per m², neither to maximum surfaces.

CONDITION

The reduction is granted for the year of completion of the housing and it is charged to the tax owed for that same year, then to the tax owed for each of the following 8 years at a rate of one ninth of its total amount for each of those years.

The reduction is distributed, in equal shares, for 9 years.

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THE ENERGY AUDIT (EA)

The EA, carried out by a qualified professional, is an efficiency report assessing the likely energy usage of a property.

CERTIFICATION OF TREATMENT OF WOOD - TERMITES

CERTIFICATION OF TREATMENT OF WOOD & TERMITES !

It is established by the construction company and tells you the means used to protect wood integrated into your new home.

It is supplemented by a brief description of the ways to protect your home from termites.

This treatment is obligatory in the departments that have been the subject of an order against termites.

Our departments concerned are :

• 35 - l’Ille-et-Vilaine

• 44 – La Loire Atlantique

• 49 – le Maine et Loire

• 56 – le Morbihan

• 72 – la Sarthe

LAND WITH A CLAY SOIL

In departments which have been the subject of a prevention order due to the clay soil, fondations must meet a certain depth depending on the degree of risk (risk of major craks in case of drought).