As part of La Loi ‘TEPA’ (Law n°2007-1223) in 2008 the French Government have introduced a policy aimed at helping more of France becoming home owners. If you meet the criteria for this then for the first 5 years of your mortgage you will be entitled to a tax credit based on the percentage of the interest paid against your loan. If your net income tax liability before the deduction is less than the deduction then the French Revenue will repay you the difference.

With effect from 2010 the French Government has amended the critera for being able to benefit from this scheme. This is mainly in regards to newly constructed property as the government has decided that over time mortgage tax relief should only be payable on such properties if they meet the low energy consumption standard However the rules on existing properties remain unchanged.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.
• The relief is granted at the rate of 40 percent of interest incurred in the first year, followed by 20 percent of interest paid for the remaining four years.
• Maximum reimbursement available for a mortgage in a single name is EUR 3,750 over 5 years (EUR 750 per annum), if this person is registered disabled then the limit rises to a maximum reimbursement of EUR 7,500 over 5 years (EUR 1,500 per annum)
• If the mortgage is in joint names then the maximum reimbursement is EUR 7,500 over 5 years (EUR 1,500 per annum), if one of the couple is registered disabled then the limit rises to a maximum reimbursement of EUR 15,000 over 5 years (EUR 3,000 per annum)
• There is also the possibility of additional sum of a maximum of EUR 500 over 5 years (EUR 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 EUR 250 per child over 5 years (EUR 50 per annum)

With regards to newly constructed property if the property is constructed to the Bâtiments Basse Consommation (BBC) low energy standard, then the relief is granted at a rate of 40 percent for 7 years. To quailfy to the BBC standard depending on what  region it is in and the properties altitude they are required to achieve an average energy consumption no higher than 50 kWh/m² per year.

For those new properties that do not meet the BBC standard, the relief will reduce to 30 percent in the first year and 10 percent in the four subsequent years, in 2011 the this will lower again to 25 percent and 10 percent and from 2012 the relief will be 15 percent and 5 percent.

From 2013 only properties that are energy positive (BPOS) will be entitled to 40 percent relief over seven years, and all other new property will need to meet the  BBC standard in order to obtain the relief of 40 percent in the first year, and 20 percent for each of the subsequent four years.

Exceprt out of the original article written by financial expert Steven Grover on expatica.com