Massive fiscal and environmental shift for the Scellier 2011 and 2012 law

Massive fiscal and environmental shift for the Scellier 2011 and 2012 law

Until late 2010 and before the Loi Scellier 2011, it is possible to invest in an apartment or home in France respecting the French Scellier 2011 law and still benefiting from a tax reduction equivalent to 25% of the amount of the property spread over 9 years. From January 1rst, 2011, the reduction rate will decrease to 13.5% in 2011 and 9% on law scellier 2012.

The principle of this Scellier law is to boost private investment in apartment in order to rent them during a minimal 9 years at a maximum rent rate. By doing the French government induce a real-estate policy and gives a tax reduction to the private investors. All studies show that 600 000 apartment are missing every year in France for renting. The government has no choice except keeping promoting this tax reduction in order to fulfill this increasing need.

Needless to say, it is advisable not to postpone this type of investment in France.

The Finance Act for 2011 driven by the green-trend of the economy and a generalized enhanced fiscal discipline will not set apart the Scellier law. The Scellier law is what is called a fiscal niche limiting the tax resources for the government but boosting the property and real-estate activity as a counterpart. To get more tax resources, the government decided to reduce all fiscal niches reduction by 10%.

Indeed, the draft of the Finance Act for 2011 presented by the French government on September 29, 2010 proposes to maintain tax reduction rate at an interesting level (even after global cut in tax reduction niches) for any French investor on the condition that the property meets the latest environmental standards. This is a direct consequence of what is called the French Environmental "Grenelle" - meaning a continuous project dedicated to introducing green-thinking in all sectors such as economy, education, health-care, etc"

Under this unique condition, the tax reduction rate will be 22% (initially 25% before the global cut of all tax reduction by 10% tax in 2011) for any investment made in 2011 and 18% (initially 20% before the global cut of all tax reduction by 10% tax in 2011) for 2012.

Even with this decrease, this kind of investment is of a real interest as it allows you to buy an apartment with a 18%-22% discount. After 9 years of mandatory renting, all investor can use personally this property to live as a primary or secondary housing.

As a conclusion:

Accelerate investment projects under French Scellier law by late 2010 or require apartment or houses respecting the latest environmental laws for 2011 and 2012

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