5.5% VAT for a new-build home in an ANRU or priority urban zone: conditions and penalties

A scheme specific to social home ownership in ANRU or priority urban zones

The reduced 5.5% VAT rate for home ownership rests on article 278 sexies, I, 11 and 11 bis, and II of the French General Tax Code (CGI), detailed in tax authority doctrine BOI-TVA-IMM-20-20-20-20190424. It covers new-build homes intended as a main residence, located in a district under an ANRU agreement (article 10 of Act no. 2003-710 of 1 August 2003) or in a priority urban policy district with a city contract (article 5 of Act no. 2014-173 of 21 February 2014).

Since 1 January 2019, a 300-metre band around these districts has also been eligible.

Income caps and occupancy duration

The applicable income cap is that of the tenth paragraph of article L. 411-2 of the French Construction and Housing Code, corresponding to the social rental loan (PLS) caps increased by 11%, calculated under article 4 of the order of 29 July 1987. The dwelling must be occupied at least 8 months a year, as a main residence, for 10 years from the taxable event, for deliveries after 1 January 2014.

In the event of a breach: a tapering VAT clawback, not a refund

If the 10-year main-residence commitment is not met, a VAT clawback, the 14.5-point difference between 20% and 5.5%, becomes due. It is not strictly a refund but a VAT reassessment charged to the buyer. This amount tapers by one tenth per year of ownership from the first year, reaching zero after 10 years.

Certain events waive the clawback: death of the buyer or of a direct descendant in the household, professional relocation of more than 70 kilometres between the new workplace and the home, unemployment of more than a year, issuance of a disability card, divorce or dissolution of a civil partnership, and, by later administrative doctrine, marriage, entering a civil partnership, the birth of a child, and the disability of a dependent child.

2025 price caps by zone

The 2025 sale-price caps, set by the order of 23 December 2024, vary sharply by zone.

5.5% VAT and the land lease scheme: two distinct tables, not to be confused

The 5.5% VAT scheme in ANRU or priority urban zones and the land lease scheme (BRS) share the same zone architecture but rely on two different regulatory texts: the first refers to the PLS scale increased by 11% (order of 29 July 1987), the second to the social home-ownership loan scale (amended order of 26 March 2004). The amounts can be close but are not identical: compare them figure by figure for the relevant year before any marketing claim.