3. Other Financial Assistance

3.1. VAT Relief

The rate of VAT (TVA) for works concerned with the improvement, conversion, and repair of a residential property benefit from a rate of 5.5%, as opposed the normal rate of 19.60%.

At the present time, the relief is available until 31st Dec 2010.

Both owners and tenants benefit from the relief, and the property can be either the principal residence of the owner/occupant or a second home.

The relief is not available for a property under two years old, for new build or increasing the external net surface area of an existing property, where it does so by more than 10%.

So a new home, a swimming pool, tennis court, a new garage or an large extension to an existing property are not eligible for the lower rate. Nevertheless, it is available for ancillary buildings to the main home, provided the works are not one of enlargement.

Accordingly, if you are carrying out the work yourself, you will be buying the materials at the full rate of VAT on which no reduced rate will apply.

However, if you then employ a tradesman to undertake the work, then this labour cost can be at the reduced rate.

The rules governing use of this tax concession were tightened up in 2006, to exclude those projects involving major reconstruction of an existing property, which effectively create a new property.

Thus, if you buy a complete ruin and undertake reconstruction of the property, the tax authority are likely consider it to be a new build and, therefore, not eligible for the reduced rate.

The builder will present you with a certificate for your to sign confirming the work is within the rules. You do not need to present this statement to the tax authority unless they specifically request it, but you must retain it for 5 years. A copy will also be retained by the builder for possible examination by the tax authority.

If the tax authority later decide that you have broken the rules, YOU would be liable for the additional VAT and not the builder.

3.2. Home Energy Conservation

A tax credit of up to 50% is available on the installation of heating and energy saving materials and equipment in the property, provided it is your principal home. Both homeowners and tenants are eligible.

The allowance is called crédit d’impôt development durable.

The main items for which assistance is granted are:

• Insulation material and equipment (25%-40%)
• Thermostatic controls and equipment (25%-40%)
• Solar heating equipment (50%)
• Heating pump (50%)
• Condensing boiler (25%-40%))
• Low temperature boiler (15%)
• Wood based heating systems/equipment (50%)
• Rainwater harvesting systems (25%)

So, for instance, if you invest in a new wood burner for your home, you can get a 50% credit on the cost of the burner itself against your income tax bill in the following year!

Where above the rate is variable, the higher rate is only available for properties constructed prior to 1997 and on condition that the works are carried out by 31st Dec of the second year of acquisition of the property.

The amount of the credit is subject to an upper ceiling on actual costs. The ceiling depends on the number of persons in the household. In the case of a couple the expenditure ceiling is €16,000 (€8,000 each). No means testing is carried out.

Only invoiced work from registered tradesmen is eligible and a tax credit is only available on the cost of the material or equipment, not the labour cost.

The equipment will need to offer a minimum quality and performance standard, which you should discuss with your installer to make sure it complies with the regulations.

You will need to declare the work on your income tax bill, enclosing a copy of the invoice for the work.

3.3 Home Adaptations

Home adaptations for the elderly and handicapped are eligible for a tax credit along the same lines as those of works of energy conservation.

The list of eligible equipment and adaptations include, bathroom and kitchen fittings, lifts, and alarm systems.

Most works are eligible for a tax credit at rate of 25%, with the exception of lifts where the rate is 15%.

The maximum credit available is €5000 for a single person and €10,000 for a couple.

3.4. Historic Buildings

If you are lucky enough to own a property that is classified Monument Historique then you can obtain assistance with maintenance and restoration works.

The assistance can be in the form of a grant, the amount of which will depend on the precise classification of the building and the nature of the works. The level of these grants can be quite substantial, around 40% of the cost of works.

There are also a range of tax benefits available for such buildings.

As you might imagine the whole process of removing such a property and seeking financial assistance is fraught with bureaucratic hurdles.

If you own such a property or you seek classification, you should make enquiries to the Service Departementale de l’Architecture or the Direction régionale des Affaires Culturelles (DRAC) within your prefecture.

3.5. Heritage Properties

If your property is not worthy of classification as a monument historique, it may still, nevertheless, be classified as a ‘heritage’ property.

If so then you may be eligible for assistance towards the restoration costs.

Financial assistance for ‘heritage’ properties are awarded by the Fondation du Patrimoine, whose main role is the protection and restoration of properties of historic or architectural interest in rural areas.

As a general rule the assistance is in the form of a tax credit up to 50% of costs, during the period when the works are carried, out up to a maximum of 5 years.

If you pay little or no income tax (as is the case for nearly 50% of the population), then a grant is payable, up to 20% of the works relating to the external structure.

The grant is only payable when the work has been completed and you will need to carry out the work in compliance with the strict restorations standards of the Fondation.

The Fondation has only been in existence for the past ten years, so it still feeling its way. Accordingly, even though you own a property of architectural or historic interest, it may not yet be classified by them.

There are a surprising number of modest buildings that have been awarded the classification. The buildings include not merely a house but ancillary buildings and interesting architectural features of an older property.

One important criterion is that the property should be visible to the public, so an otherwise interesting but isolated property that cannot be seen by passing traffic is unlikely to be eligible.

Accordingly, the main focus of assistance will be on the external areas of the property. Internal parts will only be considered to the extent to which the work is necessary to preserve the integrity of the property.

If you think you may qualify then you can make application to your regional representative, who can be found by visiting Regional Offices .

3.6. Mortgages

If you own a property in France (whether principal or second home) there is no reason why you should not consider obtaining a standard French mortgage for home improvement.

The rates of interest on French mortgages are lower than those in the UK, although arrangement fees are higher and there is compulsory life insurance.

Far better, if you can, to buy the property in the first place using a mortgage facility, as you will only have one set of legal costs. If you buy it as your principal home, you will also be eligible for mortgage tax relief on the purchase cost.

If you become resident in France then you may be able to gain access to a government subsidised mortgage.

Whilst the amount that can be borrowed on these mortgages is limited, they offer a cheap funding source for house renovation.

The mortgages are offered through all the main French mortgage lenders.

Needless to say, in all cases there are rules of eligibility.

In most cases there is an upper income limit, but the thresholds are not ungenerous.

If you work in the private sector in France you could also be eligible for mortgage obtained through your employer!

3.7. Electric Central Heating

If you are proposing to install electric central heating, then you can obtain a soft loan through EDF, the national electricity utility, with their banking partner Credit Foncier.

If you want to know more then you can read the EDF pages by visiting EDF .

3.8. Chambres d'hôtes/Gîtes de France

A number of regional councils offer assistance towards the cost of setting up, renovating or converting chambres d'hôtesand classified gîtes as part of a strategy of tourism development.

There are no national guidelines for this type of assistance, so if you need to make enquiries to the Comité Départementale du Tourisme or your Conseil Général.

As part of the condition of any assistance you will be required to make the property available for a minimum period, from three to nine years.

Next: Getting Free Architectural/Planning Advice