Heritage enthusiasts are often attracted by the idea of buying a listed, historic building. In addition to acquiring your own protected slice of history, this is also a particularly tax-efficient option. However, there are certain conditions that need to be met in terms of renovation and duration of conservation. Let’s have a look at what is involved in purchasing a listed historic building.
Listed historic buildings are properties with significant heritage value (irrespective of style or period). Their listed status (both nationally and regionally) protects them from misuse and alteration.
There are various tax benefits available for buyers to encourage them to maintain these unusual properties. However, these benefits also come with constraints.
Listed building status can be granted to buildings as well as gardens and parks. The entirety of a building or garden can be listed or just a part of it (a façade, fireplace, room etc.)
This listing recognizes that conservation is in the public interest and aims to preserve the history of the building over time without sacrificing its essential character.
“Classé” or “inscrit”: what is the difference?
When it comes to listed buildings there are two classification levels: a “bien classé” which denotes a monument of national importance and a “bien inscrit,” for buildings of local or regional importance.
A national listing represents the highest level of protection and is the most stringent when it comes to renovation work. Both types of listings mean the site is of sufficient historic or architectural value to justify its conservation.
Useful information: According to the latest figures released from the Ministry of Culture, on 1 January 2020, France had more than 44,000 listed historic buildings, classified as follows: 14,000 nationally listed buildings and 30,000 regionally listed buildings.
As such, nationally listed buildings represent a niche market although it is possible to ask for a property to be listed after purchase.
In addition to buying a property of significant architectural value, there are two other advantages that are worth highlighting.
Tax benefits of renovating an historic building
Firstly, renovating a nationally or regionally listed building is an effective way of claiming tax relief, subject to certain conditions.
For example, the cost of any work carried out is 100% deductible if you open the property to the public (50 days a year, including 25 Sundays and public holidays from April to September or 40 days from July to September) if the work has been subsidized by the State.
In other instances, for example where the work is not State subsidized, the sum deducted is still 50% of the cost of any completed work.
Inheritance tax and listed buildings
Listed historic buildings that are gifted or passed on are exempt from inheritance tax. Which is another reason to consider this kind of financial investment. But these advantages also involve responsibilities for the investor.
To benefit from these financial incentives, you need to comply with various restrictions.
Advantages that come with responsibilities
If you buy an historic monument that needs work, you will have to obtain a certificate of compliance once the building work is complete. This is released by the Regional Directorate of Cultural Affairs (DRAC).
The law is very specific about the nature of the work permitted and how it is carried out.