The Content Of The Article:
  • 6. Building permit: deadlines revised downwards
  • 7. Energy renovation: special financial assistance for the most modest households
  • VAT at a reduced rate already exists in the building sector, particularly as part of the work for energy renovation. According to the Pinel plan, this reduced VAT should also apply in order to promote access to home ownership for first-time home buyers. Explanations to follow in this article.

    New housing stimulus plan: reduced VAT

    The Pinel plan seeks to increase private investment in the building sector. To this end, the measure combines the relaxation of real estate taxation with a simplification of home ownership.

    Thus, the plan unveiled at the end of August 2014, provides for the application of a VAT reduced to 5.5% for the purchase of a new home, however subject to certain conditions:

    • The application of this VAT rate will be accessible by households "first-time buyers" with modest incomes.
    • The scheme targets new housing built in "priority" neighborhoods, distinguished by the city's latest policy, presented on June 17, 2014.

    VAT at 5.5%, who are the first-time buyers?

    First-time homebuyers benefit from several means-tested assistance, including soon reduced VAT.

    Are defined as first-time buyers, people who have never owned of their principal residences or no longer for two years. Each member of the couple forming the household must meet this condition.

    Owners of second homes or rental housing, are also considered as first-time buyers, as long as they do not own their main home.

    Former owners, who have returned to their principal residence for more than two years (24 consecutive months), are again considered as first-time buyers.

    Reduced VAT, which neighborhoods are affected?

    The "priority" neighborhoods of the 2014 city policy are 1300 and spread over 700 municipalities throughout France.

    In order to establish this list of priority neighborhoods, the sole criterion taken into account by the government remains the income of its inhabitants, compared to the median reference income.
    The map of the priority geography thus replaces the old zonings:

    • sensitive urban areas
    • urban free zones
    • etc.

    It is therefore with a view to upgrading these neighborhoods and promoting the social mix of these areas that reduced VAT will apply.

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