With the decree of 02 October 2023, the authorities have changed the zoning, i.e. the classification of certain areas according to the degree of tension they are experiencing in their local property market. What does this mean in practical terms for all the towns and cities concerned? Wealth A7 explains in this week's article.

What is the purpose of this categorisation?

Zoning, the previous zoning came into force on 01 August 2014, has been introduced as a benchmark to be able to modulate several financial incentives or well scales. In practical terms, it is used to determine:

• Income ceilings for access to HLM housing,
• Income ceilings for entitlement to the Prêt A Taux Zéro (PTZ) or Prêt d'Accession Sociale (PAS),
• For landlords of Anah-approved properties, the tax deduction on property income, the income ceiling for future tenants and the initial rent ceiling,
• For an owner of a property governed by the Pinel law, the rent ceiling.

Practical consequences!

This hierarchy corresponds to the level of tension in the property market, with "A Bis" representing the most tense zone. As the cost of land in zone A Bis is higher than elsewhere, so is the cost of living. In order to strike a balance, the resource ceilings for access to certain rights have been indexed and re-evaluated upwards.

This has a major impact on investors, since the legal rent ceilings have been re-evaluated. For example, in the beautiful city of Toulouse, which is moving from zone B1 to zone A, the rent ceiling per m² has risen from €10.55 to €13.09.

Example with figures

Let's take the example of a 64 m² T3 flat worth €250,000, purchased in 2021 and located in Toulouse. What increase in income would the new ruling allow?*

*Subject to compliance with eligibility criteria and rent revaluation rules.

Property is an important component of French people's wealth and represents a significant source of income. However, the tax implications are not insignificant, and specialist advice on wealth management is essential. Wealth A7, which has specialised in tax, property and finance for over 15 years, can advise you - contact us!

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