Rental property: Loc’Avantages transformed into a tax credit, a boost for landlords

On Wednesday October 23, the National Assembly adopted an amendment to the draft budget for 2025 which extends the Loc’Avantages system by three years. Above all, it is transformed into a tax credit, a more advantageous tax system for low-tax landlords.

The creation of a real tax status for private landlords is not yet for today. This proposal from Liot MP (Liberties, Territories, Independents and Overseas) Charles de Courson, general budget rapporteur, was rebutted on Wednesday October 23 by the government, as part of the examination of the finance bill (PLF ) for 2025 by the National Assembly. “Land revenues already benefit from tax regimes that are specific to them and which are advantageous”argued Budget Minister Laurent Saint-Martin, citing in particular the Loc’Avantages tax deduction.

The latter, which took over from the “Affordable Rent” system in 2022, must nevertheless expire on December 31, 2024. But the amendment 2688 to the PLF, supported by deputy Lionel Causse (Together for the Republic) and adopted by the National Assembly on Wednesday, extends it until December 31, 2027. Above all, it improves it. Currently, Loc’Avantages gives you the right to a tax reduction, between 15% and 65% of your rental income, depending on whether you rent your property at a price 15% to 45% lower than market rents, for at least six years. The lower you agree to a rent, the higher your tax reduction, which you deduct from your tax due. Other conditions to benefit from Loc’Avantages, the property must be rented barevia an agreement with the National Housing Agency (Anah). It must also be rented as a primary residence, to people with modest and very modest incomes depending on the criteria of Anah, and it must display a grade higher than F on the energy performance diagnosis.

Double, or even quadruple, the number of Loc’Avantages beneficiaries

Lionel Causse’s amendment transforms the tax reduction into a tax credit “in order to increase the tax advantage for the benefit of the most modest landlords». A tax credit is in fact more attractive than a tax deduction for low-tax taxpayers, insofar as it is an amount reimbursed to them by the tax authorities, and not an amount subtracted from a already modest tax. In other words, the state can give you money if the amount of the tax credit is greater than the amount you owe to the tax authorities. Whereas if the tax reduction is greater than the amount of your tax, there cannot be a refund. The amendment also extends the benefit of Loc’Avantages to furnished rentals, “whose share is increasing in the stock of housing rented as primary residence”explains Lionel Causse.

Furthermore, its amendment integrates Loc’Avantages into the tax loopholes capped at 18,000 euros, while this system currently belongs to those limited to 10,000 euros. Finally, the amendment puts an end to the need, for the owner-lessor, to sign an agreement with Anah, which adds to “the complexity of assembling files”according to the deputy. Lionel Causse replaces this agreement with a simple certificate from the landlord at the time of his income tax declaration, accompanied by the lease contract and proof of the tenant’s resources, like what exists for the Pinel system. Loc’Avantages is indeed so “complex thatin 2024, only 1,825 households will have benefitedat an estimated cost of 5 million euros”underlined Charles de Courson. With the new Loc’Avantages formula, if indeed it is kept in the final version of the initial finance law for 2025, Lionel Causse hopes “double, triple, even quadruple” the number of beneficiaries of this system.