New or old ? Advantages and drawbacks

Advantages of new properties

THREE GUARANTEES AND AN ACCELERATOR

The ten-year guarantee covers the building’s structural elements for 10 years, which means that any problem related to the structure or anything that renders the property unfit for habitation is covered. In addition, there is the one-year guarantee for perfect completion and the two-year guarantee for the proper functioning of standard equipment.
To mitigate the risk of contractor insolvency during these deadlines, the developer is obliged to take out a damage insurance policy, which will compensate

REDUCED NOTARY FEES

Notary fees amount to 2.5% of the property's value, whereas in the case of pre-owned properties, they tend to be around 8%. This represents a significant difference, especially considering that banks nowadays refrain from offering the famous 110%, which includes financing the property as well as the transaction costs, including notary fees.

In line with energy performance requirements

In terms of energy performance, thermal insulation, and the use of new technologies for heating or cooling, new real estate offers the best advantages. The near-certainty of obtaining a good grade on the Energy Performance Diagnosis (EPD) allows for renting out the property without restrictions in compliance with the Climate and Resilience Law. To recall, this law currently applies to rentals intended as primary residences for habitation but could soon extend to tourist rentals.

In terms of energy performance, thermal insulation, and the use of new technologies for heating or cooling, new real estate offers the best advantages. The near-certainty of obtaining a good grade on the Energy Performance Diagnosis (EPD) allows for renting out the property if it complies with the energy performance levels of a decent dwelling as defined by the Climate & Resilience Law, a measure extended to tourist rentals by the law of November 19, 2024. Thus, starting in 2034, a furnished tourist rental must have an EPD rating between A and D to maintain rental activity.

An exception, however, is that this energy decency obligation will not apply when the said tourist rental serves as the landlord's primary residence.

THE OPTION TO RECLAIM VAT

When purchasing a new property, it is possible to reclaim the VAT on the property's price under certain conditions. This option is not mandatory and may involve more restrictive private occupancy. Additionally, it might not always be as favourable in terms of taxation upon resale.

Pre-owned: Pros and cons

 

++ PRICE Older properties are often cheaper than new ones due to factors like depreciation of the building. They are also more open to price negotiations

 

++  LOCATION  They are usually situated in established areas with developed infrastructure, nearby amenities, and ski-in/ski-out access.

 

+ AND - CHARACTER With the exception of chalets, whose charm is timeless, residences that are over 30 years old retain their heritage in terms of style and architecture. The most beautiful buildings can be found in village resorts like Megève, Saint-Gervais, Morzine, Val-d’Isère, La Clusaz, Arêches-Beaufort, among others. Chamonix, being a mountain town, features all the profiles described above.

 

+ AND - AVAILABILITY Unlike new properties, which may require a construction period, older properties are generally available immediately. However, it is essential to consider any renovation timelines that may apply.

 

+ AND -  RENOVATION  The possibilities for renovation, especially for individual houses, are enormous, with the perfect example being a barn transformed into a chalet. In residential buildings, renovation—particularly energy-related—has become mandatory under the law of November 19, 2024, which sets a minimum energy performance threshold (EPD rated A to D) to authorize rental activity. It is therefore essential to inquire about the overall performance of the residence and any works approved by the co-ownership to meet the standards set by the law.

 

+ AND - RENTAL INVESTMENT Older and renovated properties often provide a better rental yield compared to new ones due to their location. However, they are excluded from VAT recovery on the purchase price.

 

+  FISCAL DEFICIT* When expenses (interest on loans, renovation costs, management fees, etc.) related to renting out a property exceed the generated income, a fiscal deficit can be created. This deficit can be deducted from other real estate income or global income, reducing the tax liability.

 

+  AMORTISATION When investing in older real estate for furnished rentals or para-hotel purposes, the cost of the acquisition can be amortised. This allows for a portion of the purchase price to be deducted each year, thereby reducing taxable rental income and the associated tax liability.

 

++  ABATEMENT Income from furnished rentals may benefit from a flat-rate deduction of 30% with a revenue cap of €15,000, which can go up to 50% with a revenue cap of €77,700 if the property is classified as a furnished tourist accommodation.

 

                                                            *applicable to new builds