You are offered a buy-to-let investment “with tax relief”, in mainland France or in the French overseas territories, with the tax saving calculated to the euro. Before comparing the tax advantages, it helps to understand how each scheme works, its conditions and its limits, and then to ask the question the brochure leaves out: what is the property actually worth? This article presents the main schemes in force in 2025 with worked figures, then explains why the market value of the property is the real point to watch.
The overseas productive investment tax credit (CIOP)
Provided for by article 244 quater W of the French General Tax Code (Code général des impôts, CGI), the CIOP is aimed at businesses, in particular companies subject to corporation tax (an SCI, a French property-holding company, that has opted for corporation tax; a SARL), that make a productive investment in a French overseas department or collectivity. Under the text, the tax credit reaches 35 % of the cost price of the project for entities subject to corporation tax, and 38.25 % for entities subject to income tax. For a construction project it is paid in three instalments as the works progress: 70 % when the foundations are completed, 20 % when the building is watertight, 10 % on delivery.
Example. For a project of €600,000 including VAT, the tax credit can reach €210,000, bringing the net cost of the investment down to €390,000.
Main conditions: location in the overseas territories, productive or rental use under the conditions of the text, compliance with rent ceilings and the letting period, retention of the property for five years. The credit is refundable, which makes it a financing tool, but the legal structure is tightly regulated and the construction timetable has to be followed closely.
The Girardin IS scheme
Articles 217 undecies and 217 duodecies of the CGI allow companies subject to corporation tax to deduct from their taxable profit the acquisition cost of new homes located overseas, let unfurnished as a main residence for at least five years, subject to rent ceilings and tenant income ceilings. The advantage takes the form of a deduction, supplemented by the accounting depreciation of the property.
Example. For an investment of €500,000 excluding VAT depreciated over 25 years (€20,000 a year) and €10,000 of annual charges, the taxable base falls by €30,000 a year. At the 25 % corporation tax rate, the annual saving is €7,500, or €37,500 over five years, in addition to the effect of the initial deduction.
Points to note: the advantage is spread over time, there is no refundable credit, and the scheme presupposes proper accounts and a company that actually has a profit to reduce. The company keeps the rents and may sell after the commitment period.
Non-professional furnished letting status (LMNP)
LMNP (loueur en meublé non professionnel) is not a tax reduction scheme but a tax regime. Rents from a furnished home are taxed as industrial and commercial profits; under the actual-expenses regime, the owner deducts charges and the depreciation of the property, the furniture and the acquisition costs, which sharply reduces taxable income for many years. It applies in mainland France and overseas alike.
The status remains “non-professional” as long as annual receipts do not exceed €23,000 or remain below the household’s other earned income (article 155, IV of the CGI). Above that, the landlord becomes professional, with a different regime.
Example. A furnished property of €200,000 depreciated over 25 years generates roughly €7,000 to €8,000 of annual depreciation, which reduces the taxable rental income by the same amount.
Note that the Finance Act for 2025 changed the calculation of the capital gain on sale by adding the depreciation deducted back into the acquisition price for non-professional furnished lettings, which increases the taxable gain on resale. The benefit of depreciation remains real while the property is held, but part of it is clawed back on exit.
The Malraux law and the historic monuments regime
These two regimes target the restoration of old heritage buildings and are aimed at heavily taxed taxpayers.
Malraux (article 199 tervicies of the CGI): a tax reduction equal to 30 % of the restoration expenditure on a building located in a remarkable heritage site covered by a conservation and enhancement plan, or 22 % in the other cases provided for by the text, within a multi-year expenditure ceiling. The works are supervised by the architecte des Bâtiments de France (the state heritage architect) and the property must be let unfurnished for nine years.
Example. €300,000 of eligible works at the 30 % rate give a tax reduction of €90,000.
Historic monuments: the owner of a listed or registered building may deduct from total income the property charges and works, without limit, provided the property is kept for fifteen years (article 156 bis of the CGI). This advantage falls outside the overall cap on tax reliefs (article 200-0 A).
Example. €500,000 of works deducted from income taxed at the 45 % marginal rate represent €225,000 less tax.
In both cases the works are expensive, supervised and lengthy, the administrative follow-up is heavy, and rental return is rarely the primary objective.
The question the valuer asks: what is the property worth?
All these schemes have one thing in common: the tax advantage is calculated on the price paid, and the price paid often builds in the tax advantage. A new home sold under a tax incentive scheme can change hands well above the market value of a comparable home on the local market, because the buyer reasons in tax savings rather than in price per square metre. On resale, the tax advantage does not pass to the next buyer; only market value counts.
The Charte de l’expertise en évaluation immobilière (the French property valuation charter, 6th edition, November 2025, Title III, § 1.1) defines market value as the amount for which the property would exchange, at the valuation date, between a willing buyer and a willing seller, after proper marketing, where the parties act knowledgeably and without compulsion. EVS 1 of the European Valuation Standards 2025 gives an identical definition. Neither takes account of the buyer’s particular tax position.
Before committing, two checks are useful:
- compare the asking price with recent sales of comparable properties in the same area, outside any tax scheme; the difference, if there is one, is the real cost of the tax relief;
- check the projected rent against the rents actually achieved locally and the ceilings of the scheme; an overstated rent distorts the return and, in schemes with a letting commitment, exposes the buyer to losing the advantage if the property stays empty for long.
When an investor discovers after the event that the property was worth markedly less than the price paid, the question becomes one of loss: the difference between the price and the market value at the acquisition date, and the possible liability of those who advised the operation. That is a figure a valuation report can establish, whether as a private valuation or a court-ordered one.
In summary
In 2025, the CIOP and Girardin IS offer companies substantial advantages overseas; LMNP remains an efficient regime for individuals, with tougher tax treatment on exit; Malraux and historic monuments support the restoration of heritage buildings for the most heavily taxed. The choice depends on the tax profile, the holding structure and the nature of the property. In every case, the tax simulation is no substitute for an independent check of the value of the property and the expected rent.
Further reading
The Property loss of value page describes how I quantify the difference between the price paid and the real value. On the same theme, you can read Tax incentive property in France: check the real value first and Cancelling a Pierre & Vacances leaseback purchase for a disappointing return?.
What next
Has your property lost value because of a third party?
Neighbouring construction, hidden defect, wrong floor area, overpayment at purchase: the loss of value and the loss of enjoyment quantified with the method accepted by French courts.
Free quote, by email or by phone. No commitment before the quote is accepted. Fees are never linked to the value of the property (Charte de l’expertise, Title I, §2.1).
