Intermediate rental housing (LLI): 10% VAT, property-tax exemption, conditions

A scheme reserved to a legal entity, open to individuals through a company

Intermediate rental housing (LLI) is based on article 279-0 bis A of the French General Tax Code (CGI), which applies a 10% VAT rate instead of 20% to the purchase price of a new-build home, under cumulative conditions on the tenant's income, the rent cap, the location, and the status of the beneficiary, who must be a legal entity. An individual therefore cannot invest in LLI directly.

Since the 2024 Finance Act, the scheme has been open to individuals, provided they invest through a company: an SCI taxed under income tax or corporate tax, or a family SARL.

Zone and social-mix conditions

The dwelling must be new-build and located in a high-demand zone, the A, Abis or B1 zoning used for the Pinel scheme. It must also meet a social-mix condition: be located either in a municipality with more than 25% social rental housing, or in a development where social housing makes up at least 25% of the combined social and intermediate housing.

Property tax: exemption or tax credit, depending on the completion date

For dwellings completed before 1 January 2023, the LLI scheme grants an exemption from property tax on built land (TFPB) for 20 years from the year following completion (article 1384-0 A of the CGI).

For dwellings completed from 1 January 2023, that is, for any new construction sold today, this mechanism is replaced by a corporate-tax credit equal to the property tax due, for 20 years (article 220 Z septies of the CGI). This text explicitly targets corporate tax: whether it applies to a transparent SCI under income tax is not confirmed by an official source and should be checked with a tax adviser before committing.

What is not an advantage specific to the LLI

The lower notary fees often advertised, around 2% to 3% of the price, are not specific to the LLI scheme: they come from the general tax treatment of any new-build or off-plan purchase, where the land-registration tax, about 0.715%, replaces the transfer duties of older property, 5.09% to 5.80%. A non-LLI new-build purchase would benefit from exactly the same lower fees.

The letting commitment often advertised at 15 to 20 years has no single explicit legal basis in article 279-0 bis A itself. The mechanism that genuinely constrains is the tapering VAT clawback of article 284, II bis of the CGI in the event the commitment is broken, calculated over 20 years, with tolerance for partial sales from the 11th year.