From January 1, 2016, only private home renovations over 10 years old will still be eligible for the reduced VAT rate of 6%. If your home is between 5 and 10 years old, do not delay in taking out a renovation loan to benefit from this favorable measure, the conditions of which our legal expert outlines.
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 home.
Conditions
The building must be used exclusively for private housing once the work is completed.
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 increase to 10 years from January 1, 2016. Secondary residences are included.
The targeted real estate operations are transformation, renovation, rehabilitation, improvement, repair, or maintenance (excluding cleaning) of all or part of a real estate property, including materials supplied by the contractor and the provision of personnel.
Also considered as benefiting from the favorable rate are: heating installation, sanitary installation, electrical installation, shutter installation, placement of stoves, radiators, individual convectors using wood, coal, oil, gas, or electricity (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 rendered.
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 (deed of ownership, lease contract) will also cover you in case of a VAT administration audit.