Malraux law: Investing in real estate in Paris

You have probably already heard about the Malraux law. If you are thinking of investing in rental real estate, maybe you should turn to Malraux programs and high-end real estate? Here is a variety of information on this subject.

Focus on the Malraux law

The Malraux law (also called the “Malraux system”) was put in place by André Malraux in 1962. Its objective? Complete the law in relation to the protection of Historical Heritage. How? By helping French men and women who want to start real estate restoration. With the Malraux law, it is thus possible to invest in real estate to rent it out and to benefit from a significant tax exemption that can vary between 22 and 30% depending on the zone. The tax reduction is calculated on the total amount of renovation work (which must be supervised by a Bâtiments de France architect). The expenses incurred for the work must not exceed 100,000 euros per year. In 2019, the amount of work was thus capped at 400,000 euros for four consecutive years.
With the Malraux law, the 30% tax reduction is dedicated to buildings located:

• on Remarkable Heritage Sites with approved PSMV (preservation and enhancement plan);
• in QADs (old degraded neighborhoods);
• in neighborhoods with NPNRU (New National Urban Renewal Program) agreements;
• in old saved sectors.

The 22% reduction is, for its part, reserved for buildings located:

• in Remarkable Heritage Sites with approved PVAP (plan for the enhancement of architecture and heritage) or whose restoration program has been declared of public utility;
• In ancient Architectural, Urban and Landscape Heritage Protection Areas (ZPPAUP) and areas for the enhancement of architecture and heritage (AVAP).

In 2019, an amendment was tabled by Joël Giraud to stop the Malraux device as early as 2023. However, he withdrew his amendment. Therefore, individuals will still be able to turn to Malraux programs after 2023 (unless there is a new amendment or other change in the law).
Did you know that? To benefit from the advantages of the Malraux law, you must comply with various conditions:

• the property must be rented unfurnished as a main residence for at least nine years and within 12 months after the end of the work;
• the accommodation not be rented to a member of your fiscal household or to a descendant/ascendant;
• the property must undergo work that will result in a complete restoration without any change in living space;
• the property must be restored at your initiative or that of a public authority/body commissioned by a public authority;
• you must join the Free Urban Land Association (AFUL);
• You are required to obtain a driving license or a Special Construction Authorization (AST) issued by your prefecture after consulting the chief architect of Buildings in France.

Investing in high-end real estate with Malraux law programs

Do you want to invest in real estate in order to rent the property purchased? What if you turned to Malraux programs and luxury real estate? Properties eligible for the Malraux scheme are generally high-end, because they are located in historic city centers, for example. However, such properties that have been completely renovated and, in addition, are located in protected neighborhoods or in areas that protect architectural, urban and landscape heritage can only attract tenants.
Thanks to the Malraux law, all natural persons subject to income tax (and whether or not holders of SCI/SCPI shares) as well as all companies not subject to corporate tax (corporate tax) can invest in high-end rental real estate. However, it is true that investors are more often (but not necessarily) high-tax individuals. Because let's not forget that with the Malraux programs, it is necessary to be able to support a large construction budget to be financed in one, two, three or even four years.

The main points to remember

• The Malraux system was put in place nearly 60 years ago in order not only to protect French Historical Heritage, but also to encourage French people to invest in rental real estate.
• In theory, any taxpayer can benefit from it. But as the amount of work can be high and to be paid for over a short period of time, it is more generally people with high taxes who benefit from it.
• Properties eligible under the Malraux law are generally high-end apartments and properties located in historic areas.
• The tax reductions proposed with the Malraux system vary between 22 and 30% depending on the situation of the property. For 200,000 euros of work, the amount of tax exemption can thus be 44,000 or even 60,000 euros.
• To take advantage of the Malraux law, you and your home must comply with various conditions (membership in AFUL, unfurnished rental for at least nine years...).

Are you interested in the Malraux system? Do you want to build up real estate assets and benefit from additional income? Bet on high-end rental real estate. At HOME SELECT, we offer you our support in order to find you THE ideal property. In addition, benefit from our advice and our expert eye. Do you want to know more about our services and other formulas? Contact us without further delay.

1-https://investissement-locatif.co/pourquoi-investir-dans-limmobilier-haut-de-gamme/ + https://www.loi-malraux-immobilier.fr/ + https://www.net-investissement.fr/nos-conseils/immobilier/nos-guides-immobiliers/defiscalisation-immobiliere/malraux/les-avantages-de-la-loi-malraux-1551.html