Tax Incentives To Tempt Investments In Social Housing In French Overseas Territories

by Ulrika Lomas, Tax-News.com, Brussels

10 June 2009

In a desperate bid to encourage investment in social housing in French overseas departments and territories, the French government has recently introduced a new measure granting a 50% tax reduction as an incentive. Although part of this tax benefit may have to be passed on to an operator, such as a social housing company, the measure nevertheless presents an attractive option for anyone eager to reduce their tax bill.

Up until now, measures designed to encourage investment overseas have only targeted investment in the private housing sector, often resulting in over-supply. However, in French overseas territories there is an urgent need for social housing. Intended to meet this demand, the law for the economic development of French overseas territories or LODEOM provides a specific measure granting taxpayers a 50% reduction in tax on the purchase price of a property destined for rent.

Dubbed the “loi Jego”, this measure is designed to benefit property developers constructing social housing, operators renting out the accommodation, such as social housing companies, and individuals from France wishing to invest in French overseas territories.

Published in the official journal on May 27, and appearing under Article 199 of the general tax code, the measure stipulates that the tax reduction is only accorded once during the investment process.

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