Which tax-reduction schemes apply to a rental investment in the French overseas territories?

A constant principle, schemes that keep changing

For decades, tax law has encouraged overseas investment through specific tax reductions and credits, regularly extended, narrowed or abolished by the budget acts. The principle is stable; the parameters (rates, caps, eligible territories, deadlines) are not. Any decision must therefore start from a check of the law in force for the year of the investment, on Legifrance, impots.gouv.fr and in the BOFiP.

A recent illustration: the overseas Pinel scheme, long the flagship of overseas rental investment, ended for acquisitions after December 31, 2024. A scheme presented as available may no longer be so: always demand the exact reference of the CGI article and its version in force.

The overseas-specific incentives provided for by the CGI

The architecture of the French General Tax Code distinguishes several families of overseas investment incentives. The list below describes this architecture, not a guaranteed offer: each text has its own conditions, commitment periods, caps and expiry dates, amended several times.

• Article 199 undecies A: a historical tax reduction for overseas housing; its scope is now residual (certain rehabilitation or hazard-reinforcement works, depending on the version in force).
• Article 199 undecies B: the Girardin tax reduction for productive investments, of the one-shot type (see our dedicated guide to the Girardin tax-reduction scheme).
• Article 199 undecies C: a tax reduction for social housing, now refocused mainly on the overseas collectivities and New Caledonia.
• Articles 244 quater W, X and Y: tax credits benefiting businesses and social-housing organizations that invest in the overseas territories; they structure a large part of the programs offered to individuals through arrangements.

General-law regimes, often the most solid

In the DROM, the national taxation of rental income applies. These general-law regimes, not specific to the overseas territories, are often more durable than the dedicated schemes and deserve to be compared systematically.

• Non-professional furnished rental (LMNP): the micro-BIC or actual regime with depreciation, applicable in the DROM as in mainland France; the micro-BIC thresholds and allowances as well as the treatment of depreciation on resale have changed recently, check the parameters in force.
• Property deficit (Article 156 of the CGI): offsetting works against property income, and against overall income within the limit set by the text.
• Denormandie in the existing housing stock (Article 199 novovicies of the CGI): a tax reduction for a purchase with works in certain eligible municipalities; check that the targeted overseas municipality appears in the zoning and that the scheme is still open at the date of your purchase.
• Bare ownership, SCPI (real estate investment trusts) or rental investment without a tax lever: sometimes more relevant than a constraining tax-reduction scheme, especially if the property is intrinsically profitable.

The cap on tax loopholes, higher in the overseas territories

The year's tax advantages are subject to an overall cap (Article 200-0 A of the CGI): 10,000 euros in principle, raised to 18,000 euros when the total notably includes tax reductions for overseas investments. Particular rules apply to the Girardin scheme, of which only a fraction of the advantage is retained in the calculation. These amounts may be modified: check the figures applicable to your tax year before any subscription.

The method for choosing without going wrong

Faced with shifting schemes, a discipline of verification protects better than any sales brochure.

• Check the existence of the scheme for the year of your investment: the version in force of the CGI article on Legifrance, the BOFiP commentary, the practical income-tax brochure.
• Check the eligibility of the territory and the municipality: some schemes distinguish DROM and COM, others rest on municipal zoning.
• Cost the operation without the tax advantage: if the investment is not profitable without the tax reduction, it is fragile.
• Check the rent and resource caps where the scheme provides for them: failure to comply triggers the claw-back of the advantage.
• Have the arrangement validated by a professional independent of the seller: a notary, a tax lawyer or a chartered accountant.