From January 1, 2016, only renovations of private homes over 10 years old will still benefit from the reduced VAT rate of 6%. If your home’s age is between 5 and 10 years, don’t delay in taking out a renovation loan to take advantage of this favorable measure, which our lawyer outlines the application conditions.
Beneficiaries of 6% VAT for Home Renovation
The law targets anyone who holds either a real right (ownership, usufruct, emphyteusis) or a right of enjoyment (tenant) on the property.
Conditions
The building, once the work is completed, must be used exclusively for private housing.
In the case of mixed use (private housing and professional activity), two scenarios must be distinguished.
Either the private use is dominant, in which case the reduced VAT rate of 6% applies uniformly.
Or the private use is not dominant, in which case the VAT rate of 21% applies to the professional part and the VAT rate of 6% applies to the private part.
Under the current legislation, the work must be carried out on a private home that is at least 5 years old. This threshold will be increased to 10 years from January 1, 2016. Secondary residences are included.
The real estate operations covered include transformation, renovation, rehabilitation, improvement, repair, or maintenance (excluding cleaning) of all or part of a property, including materials provided by the contractor and the provision of personnel.
The following are also considered to benefit from the favorable rate: installation of heating, sanitary installation, electrical installation, installation of shutters, installation of stoves, radiators, individual wood, coal, oil, gas or electric convectors (this list is not exhaustive).
Formalities
To benefit from the reduced rate, you will need to provide an invoice from your contractor with the description of the materials supplied and the services performed.
Indeed, the reduced rate does not apply to work carried out by the owners themselves.
Any other document proving the private use of your property (property deed, lease contract) will also help cover you in case of a VAT administration check.
