Denormandie: tax reduction rates and investment ceilings

In mainland France, the Denormandie tax reduction is 12% of the cost price for a 6-year rental commitment, and 18% for 9 years. According to the BOFiP (Official Bulletin of Public Finances), the cost price used for the tax reduction is capped at €300,000 per taxpayer per year, and at €5,500 per square meter of living space. The reduction is spread in sixths or ninths over the tax liability of subsequent years. Any amount exceeding the tax due is lost.

The table of rates is incomplete. Official pages (the F35011 fact sheet from the public service website and economie.gouv.fr) also mention a commitment longer than 9 years, which the BOFiP (Official Bulletin of Public Finances) does not mention. These sources do not agree: we do not publish the duration or rate for this option (details in the section "What the official sources do not say in the same way").

This page covers the 6- and 9-year interest rates, price and rent ceilings, and how the tax reduction is applied. It does not address commitment periods beyond 9 years, nor the program's end date: official sources disagree on these two points (see the section "What official sources disagree on," below). It also does not cover the renovation requirements, which are addressed on a separate page.

Rates vary depending on the length of the commitment.

These two rates are listed on the government website, economie.gouv.fr, and in the BOFiP (Official Bulletin of Public Finances). This table only includes 6- and 9-year commitments; see the following section for other durations mentioned in some sources. The rate applies to the cost price, within the limits of the ceilings, not to the gross purchase price.

What official sources do not say in the same way

The F35011 fact sheet from the public service website and the economie.gouv.fr page mention a commitment longer than 9 years, with a rate exceeding 18%. The BOFiP (version of 28/03/2024) and the F35782 fact sheet from the public service website on rental schemes only mention commitments of 6 or 9 years, renewable. The scheme's validity dates also differ between the two sources.

We are not making a definitive decision: this page does not provide a duration, rate, or end date for this option. Before signing any document, these two points should be verified against the current text, with the assistance of an advisor or notary.

On what basis is the reduction calculated?

The reduction is calculated on the cost price of the property. For a property acquired for renovation, the BOFiP (§ 10) describes it as the acquisition price, plus the costs related to the acquisition (notary fees, intermediary commissions, registration fees and land registration tax), to which are added the eligible improvement work invoiced by a company.

For a property sold with work carried out by the seller, the BOFiP (§ 20) retains the acquisition price including the share of work stipulated in the contract.

According to the BOFiP (French Official Tax Bulletin), the €5,500 per m² ceiling is a maximum cost price per square meter of living space. It applies both in mainland France and overseas territories.

Investment ceilings

Three points to clarify:

• The annual ceiling of €300,000 is common to both the Denormandie and Pinel schemes. It applies to all operations of the year, not to each one.
• The boundary between two dwellings is also common to both schemes, per tax year.
• The base used is the lowest of the limits. A 45 m² dwelling is limited to €247,500 (45 x 5,500), although €300,000 remains available during the year.

The overall cap on tax benefits also applies to this reduction. The government website refers you to a dedicated information sheet, without any figures on the Denormandie page. This can be verified on your overall tax return.

How is the reduction allocated?

The reduction is first applied to the tax of the year in which the event occurred. It is then spread out, according to the chosen period, at a rate of one-sixth or one-ninth of its amount each year.

The triggering event depends on the operation:

• the date of acquisition, for a dwelling acquired with work or resulting from a converted premises; ;
• the date of completion of the works, for a dwelling acquired for the purpose of works; ;
• the date of completion of the accommodation, for a property that you are converting yourself; ;
• the subscription date, for a SCPI.

The BOFiP is net on the excess: the balance cannot be applied to the tax of subsequent years, and the unapplied portion does not give rise to a refund.

A simple calculation illustrates the effect: one-sixth of 12 % and one-ninth of 18 % both amount to 2 % of the base per year. A 9-year commitment therefore extends the benefit for a longer period at the same annual amount. It also assumes that the tax payable remains relatively high for 9 years.

Numerical example (fictitious profile)

Situation. Nadia buys a 45 m² older property in an eligible municipality, with the intention of renovating it. Purchase price: €180,000. Acquisition costs: €14,000. Renovation costs billed by a company: €76,000. The tax against which the reduction can be applied is €3,800 per year, consistently (hypothetical situation).

Issue. What basis should be used, and what portion of the reduction is actually allocated?

Strategy. Calculate the cost price, compare it to the two ceilings, apply the 6 or 9 year rate, then distribute by sixths or ninths taking into account the tax available each year.

Result.

The cost price of €270,000 exceeds the surface area limit of €22,500. This portion does not generate any reduction. And since the available tax (€3,800) is less than the annual reduction (€4,950), €1,150 is lost each year.

This profile is fictitious. The amounts and annual tax are hypothetical. The calculation does not take into account rental income tax or the overall tax cap. It illustrates a mechanism and does not predict your specific situation.

Rent ceilings in 2026

The property is rented unfurnished, with a capped rent per square meter. For 2026, in metropolitan France, the public service indicates the following monthly ceilings, excluding charges:

These ceilings are revised annually. Tenant income limits and rental conditions are among the scheme's requirements.

Extension of the commitment

According to the BOFiP (§ 270, version of 28/03/2024), the commitment can be extended for periods of three years. After an initial commitment of 6 years, there are two possible periods, with a further reduction of 6 % followed by 3 %. After 9 years, only one period is possible, with 3 %.

The BOFiP (Official Bulletin of Public Finances) reserves this supplement for investments made during a specific period. The official pages do not agree on the end date of the scheme: we do not publish a date. Before making any commitment, check the current text to see if this extension applies to your transaction.

What changes depending on your situation

• The surface area of the accommodation, which sets the ceiling per square meter.
• The actual cost price, including the fees and work billed by a company.
• Your taxes for the coming years, which determines what will actually be charged.
• Other investments of the year, which consume the same ceiling of €300,000 and the same limit of two dwellings.
• The overall cap of your tax advantages.
• The area, which sets the maximum rent.

The rule depends on your situation. No results are guaranteed.