The Malraux scheme is aimed at owners who invest in the complete renovation of buildings with historical or aesthetic value located in specific areas. These properties must be intended for rental purposes. In return, these taxpayers receive an income tax reduction for the expenses they have incurred.
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New : The finance law for 2024 extends the tax reduction until December 31, 2024, for expenses incurred on buildings located in a degraded old quarter (QAD) (Article 199 tervicies, I d 2° of the CGI) or in an area with a high concentration of degraded old housing and subject to a multi-year agreement as part of the new national urban renewal program (NPNRU) (Article 199 tervicies, I 2° bis of the CGI).
What are the conditions of the Malraux scheme ?
The people concerned
The scheme applies to individuals and individual associates of certain companies, resident in France for tax purposes, who renovate buildings of historic or aesthetic interest.
Good to know : the Malraux scheme is applicable within the framework of a contract for the sale of a building to be renovated, as stipulated in article L. 262 1 of the French Construction and Housing Code (Building and Housing Code)
Concerned housing
The geographical scope of the tax benefit was modified by Law 2016-1918 of December 29, 2016. Therefore, since July 9, 2016, buildings must be located :
- in a Remarkable Heritage Site (SPR), covered by an approved safeguarding and enhancement plan (PSMV) or an approved plan for the enhancement of architecture and heritage (PVAP), or when the restoration has been declared of public utility (Article L 313-4 of the Urban Planning Code).
- in a Degraded Old Quarter (QAD) when the restoration has been declared of public utility.
Use of rehabilitated properties
When the restoration work is carried out on a residential premises, the building must be rented out unfurnished, for the same purpose. The lease term is 9 years and must take effect within 12 months following the completion date (the date on which the property is habitable) of the works. The tenant must not be part of the lessor's tax household, nor be one of their ascendants or descendants.
When expenses are incurred on premises used for a different purpose, the lessor must also rent it out for 9 years, but no specific use is required. However, it's important to note that the tax reduction is reserved for income taxed in the category of property income.
Concerned works
The works must lead to the complete restoration of a built building located in one of the predefined sites or districts. The works must be supervised by Architecte des Bâtiments de France (ABF) and, depending on the nature of the works and the area concerned, require a building permit or prior declaration. The restoration operations must necessarily have been declared of public utility (except in cases where a safeguarding or enhancement plan has been approved).
The types of expenses eligible for the tax reduction are specified in Article 199 tervicies II C of the General Tax Code, including repair and maintenance expenses or insurance premiums (Art. 31, I-1°).
Tax reduction terms
The basis for calculating the tax reduction is the amount of the defined expenditure, excluding the purchase price of the home.
The triggering event for the tax reduction is the date of payment of eligible expenses by the owner.
The reduction rate is :
- A 30% reduction for buildings located in a Remarkable Heritage Site with an approved Safeguarding and Enhancement Plan (PSMV), in Degraded Old Quarters (QAD), and in districts under the New National Urban Renewal Program (NPNRU, which are the former protected sectors) when the restoration has been declared of public utility.
- A 22% reduction if the buildings are located on a Remarkable Heritage Site with an approved Heritage and Architecture Enhancement Plan (PVAP) or whose restoration program has been declared of public utility (former ZPPAUPs or Zones for the Protection of Architectural, Urban, and Landscape Heritage and AVAPs or Areas for the Enhancement of Architecture and Heritage).
The amount of work is capped at €400,000 over a period of 4 years from the year in which the work permit is issued.