Mortgage Tax Relief

How is the new law going to work?

As promised Nicolas Sarkosy's government announced on the 12th July 2007, that the proposed Tax Relief on Mortgage Interest law had been passed.

The most import point concerning this new law is that you are only eligible if the property concerned is your main residence, and that the Act de Vente was not signed before the 6th May 2007. If you meet these two criteria then you will be entitled to a reimbursement of up to a maximum of 20% (40% for the 1st year) of the interest paid on first 5 years of your mortgage against your Income tax bill.

• Tax Relief only applies to the first 5 years of your mortgage.
• Applies whether you are buying a house/apartment or building a house.
• Is available for 1st time buyers and existing home owners who are buying a new main residence
• Maximum reimbursement available for a mortgage in a single name is 3,750€ over 5 years (750€ per annum), if this person is registered disabled then the limit rises to a maximum reimbursement of 7,500€ over 5 years (1,500€per annum)
• If the mortgage is in joint names then the maximum reimbursement is 7,500€ over 5 years (1,500€per annum), if one of the couple is registered disabled then the limit rises to a maximum reimbursement of 15,000€ over 5 years (3,000€per annum)
• There is also the possibility of additional sum of a maximum of 500€ over 5 years (100€ per annum), for each person residing within your main residence for whom you officially have financial responsibility for i.e. Children, Parents. With regards to children where the parents are divorced and have joint access the maximum available would be 250€ per child over 5 years (50€ per annum)

For a breakdown of how this will effect a mortgage of €100,000 and €200,000 visit http://www.cbanque.com/credit/interets-emprunts-historique.php  (In French but tables are easy to understand)

Unfortunately as stated this is not retrospective, but if you are in the process of buying your main residence make sure you check with your French lender that you are getting the benefit.

This law already has a few proposed amendments, and these details were only correct at the time of writing (19/09/07). Information is only provided as a guide and, if you need assistance in this area you are strongly advised to seek the help of a specialist in this field as each individual case is different.

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Provided by Steven Grover, English Chartered Institute of Insurance qualified expatriate based in Troyes.