- Loi Girardin, a tax exemption Outremer
- 1- Girardin Act: main residence
- 2- Girardin Industrial Law
- 3- Social Girardin Law
For some years now, successive governments have put in place various advantageous tax provisions for investors in rental real estate. The Girardin law is one of them and is interested in investments in Overseas. This DOM-TOM tax exemption law is of interest not only for social housing but also for the development of the industrial fabric. Zoom on investment in Girardin law...
Investment in Girardin law
Loi Girardin, a tax exemption Outremer
The Girardin scheme, launched on July 21, 2003 and numbered 2003-660, promotes investment in new rental property and industrial development through advantageous tax provisions. Girardin tax exemption rate is calculated based on the area and not the purchase price or profitability. The tax reduction is calculated by multiplying the living area of the dwelling (plus 14 m² of terrace maximum) by 2.438 € HT (rate of 2016 reviewed every year).
Accessible to any French taxpayer, the investment in the Girardin law can be broken down into three main components defined below.
1- Girardin Act: main residence
Here, the purchase of a new home gives right to a tax cut that varies between 25 and 50%. The property in question must be located in the DOM-TOM et intended for empty rental as a principal residence for a period of six years. The monthly rent ceiling is 169 € / m² in the DOM, Saint-Martin, Saint-Barthélemy and Mayotte and 210 € / m² in French Polynesia, New Caledonia, Wallis and Futuna, French Southern and Antarctic Lands, Saint-Pierre- and Miquelon.
Regarding the tenant, he must justify income below a legally defined limit and the rate differs depending on the location of the property.
If the investor buys the property to make it his or her own principal residence, then he will be able to benefit from a tax reduction of 25% spread over 10 years.
2- Girardin Industrial Law
Thanks to this provision, it is possible to greatly reduce its tax, but under certain conditions. Concretely, it is necessary to acquire industrial equipment (from local companies in France Overseas), half of which will be deducted from taxes. The commitment to hold these assets is 5 years. Attention, an approval is necessary according to the sectors of activities and the amount of the exercise. In addition, the company must have been operating overseas for at least two years.
This is to encourage taxpayers based in mainland France to invest in the DOM-TOM in order to boosting the economic sector and employment.
3- Social Girardin Law
This is a provision comparable to the main residence version of the Girardin law, but this time applying to social housing located overseas. The aim is then to encourage the construction of social housing (or renovation) to cope with the housing shortage. The deduction tax can reach 20% the amount of the investment in Giradin law under certain conditions mentioned in article 199 undecies C of the CGI.
To read also: Tax exemption and law Pinel.