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Saturday, February 15, 2025

Impact of the 2025 Budget on Housing in France: Key Insights

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On February 3, Prime Minister François Bayrou utilized Article 49.3 to pass the 2025 State budget without a parliamentary vote. The budget includes initiatives to enhance the housing sector, despite a €1.5 billion funding cut. Key measures feature increased property transfer taxes, tax-free gifts for first-time homebuyers, reduced funding for the MaPrimeRénov’ program, an extended zero-interest loan (PTZ) for new homebuyers, higher taxes on non-professional furnished rentals, and a €200 million decrease in solidarity rent reduction.

On Monday, February 3, at approximately 4:30 PM, Prime Minister François Bayrou invoked paragraph 3 of Article 49 of the Constitution. This pivotal action aimed to hold his government accountable for the passage of the 2025 State budget bill without requiring a vote from the deputies. Within hours, the Socialist Party urged its members to oppose the censure motion proposed by La France insoumise. The outcome suggests that the budget is likely to be enacted this Wednesday.

The budget bill consists of around one hundred articles, with several initiatives designed to boost the housing sector. However, it is important to highlight that the budget also proposes a reduction in funding for this sector by €1.5 billion. A significant change includes an increase in transfer taxes related to property sales, alongside the expansion of the zero-interest loan (PTZ). Here’s a detailed look at the measures confirmed by the joint committee and authorized under 49.3.

Boost in Transfer Taxes

The transfer taxes on property sales (DMTO) account for a substantial portion of notary fees. These taxes are collected on behalf of municipalities, departments, or the State during real estate transactions and serve as a vital revenue stream for local authorities. However, due to a decline in property sales, this funding source has been steadily diminishing.

The 2025 State budget proposes a 0.5-point increase in the DMTO ceiling, translating to a 10% rise over the next three years. Notably, first-time buyers will be exempt from this increase. ‘This increase is significant: it equates to an extra €1,500 for a property valued at €300,000’, lamented the National Real Estate Federation (FNAIM) back in January.

Tax-Free Gifts for First-Time Homebuyers

The 2025 budget also extends support for individuals purchasing or building their first primary residence or undertaking energy renovation projects. If you receive a financial gift, the budget allows for a tax exemption on transfer taxes. According to Article 19 of the budget bill, ‘Gifts of money given directly to a child, grandchild, great-grandchild, or, if none exist, a nephew or niece, are exempt from transfer taxes up to a limit of €100,000 per donor to recipient and €300,000 per recipient.’

However, it is crucial to remember that the exemption will be forfeited if the recipient does not maintain the property as their primary residence or fails to rent it out as a residential unit for a minimum of five years.

Reduction in MaPrimeRénov’ Funding

The budget allocation for MaPrimeRénov’ in 2025 has been decreased to €2.3 billion, reflecting a reduction of nearly €460 million in payment credits. ‘This cut is based on optimizing cash flow, advances provided to households, and overall budget management, particularly concerning the budget reserve. It will also factor in the lack of payments arising from the censure-induced service regime.’ assures the Ministry of Housing. The program remains accessible for one-off actions.

Extension of the PTZ

The joint committee has approved the extension of the zero-interest loan (PTZ) for first-time buyers of new properties across France. This initiative now encompasses both apartments and single-family homes. The aim is to temporarily broaden eligibility for the new PTZ for housing located in collective residential buildings and for individual homes. This measure is projected to be in effect for three years.

Higher Taxes on Non-Professional Furnished Rentals

Article 24 of the budget bill proposes an increase in taxation at resale for non-professional furnished rentals. This adjustment incorporates accounting depreciation into the calculation of capital gains on sale. However, student residences, senior living facilities, and properties designated for the elderly or disabled are excluded from this proposal.

Decrease in Solidarity Rent Reduction

The budget bill also reduces the solidarity rent reduction (RLS) by €200 million. This program aims to assist low-income households in alleviating rental costs in social housing. According to the Ministry of Housing, this measure is intended to facilitate the revival of social housing production.

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