Today is: 30 July 2010
Q: What is the “Fondation du Patrimoine”?
A: The Fondation du Patrimoine is a private and independent organisation which has been set up in France to protect properties which have some value but which are not listed or otherwise protected by the French state.
Q: What is the purpose of this organisation?
A: The Fondation du Patrimoine is intended to grant the owner of certain properties which are viewed as having some historical value, a ‘label’ which allows the owner of the property to obtain income tax deductions for works carried out to restore and repair the property. It is unusual that a private organisation, by simply recognising that a private property (in which the owner is probably living) has some historical importance, can give the owner significant income tax advantages which are not capped in any way.
Q: What conditions need to be fulfilled to receive the “label”?
A: In order to be eligible to have a property ‘labelled’, the property has to be owned either by a physical person, who is liable for income tax, or an SCI. The idea is that it should not be owned by a company or used for commercial purposes. The building can be habitable or not habitable, and could be a village house, a rural manor, or a barn. Normally the properties are to be found in rural areas, though it is possible that they can be in urban areas. One of the key requirements, however, is that the property must be visible from a public road.
Q: What are the tax consequences?
A: Broadly, the tax reliefs are that you can deduct 50 per cent of the total cost of the restoration and repairs against your global tax receipts for income tax purposes, if the property does not produce any income. This would be the case if the owner occupied the property either as a main or as a secondary residence, or if the property was not habitable for other reasons.
Alternatively, if the property does produce an income, such as property which is rented, without any furniture, or one in which people pay to have access to the property – even for a fairly small entrance fee, it is possible to deduct 100 per cent of the cost of the renovation and repair works against, firstly, the income from the property and, to the extent that this is insufficient, against your other French income. This is a very valuable relief as you get 100% tax relief against income for capital works.
However even if the property is not income producing you are entitled to deduct 100 per cent of the costs of the works against your income, provided you have obtained at least 20 per cent of the costs from public and Foundation grants.
Q: What kinds of works are “eligible” for the “label”?
A: The works which qualify for this tax relief generally extend to the façade, roof and masonry, when works are carried out to retain original characteristics of the building. You have in advance to obtain the approval of the Architecte des Batiments de France, which is a part of the Ministry of Culture. Certain internal works may be acceptable, though this is on condition that you are prepared to open the property to the public. You cannot obtain a tax deduction if you carry out the works before you have obtained the ‘label’.
Q: What steps need to be taken to receive full advantages of the “label”?
A: The approval is given for five years and there is no obligation for you to open the property to the public. It must however be clearly visible from a public road, and you have a free choice of workmen to carry out the works provided the specifications of Architecte des Batiments de France are fulfilled. The architect’s fees are also deductible against income tax. It is worth while checking the relevant French tax legislation for the requirements in order to obtain the full tax relief. These are contained in the French tax guide. It is important also to complete the necessary French tax returns and lodge the appropriate certificates. It is necessary to specify the exact works which were undertaken and care should be taken when completing these forms. More information can be found at www.fondation-patrimoine.com.
2nd May 2007