Borloo law – who does it apply to?

The main advantages of the Borloo law

The Borloo law enables buyers to deduct 65% of a rental property acquisition price from their taxable income, whilst simultaneously helping to provide affordable rental accommodation.

This new law was created in order to make it easier for low-income households to find a rental property. It came into effect on 1 September 2006, with a retroactive effect from 1 January 2006, meaning that you can opt for the Borloo law for properties bought from 1 January 2006.

The Borloo law is not a substitute for the Robien law, but a compliment to it, meaning that investors can opt for one or the other. The Borloo law enables landlords to deduct 6% of the acquisition price each year for the first 7 rental years, then 4% each year for the next 2 years, and finally 2.5% each year for 6 years, amounting to 65% of the acquisition price over 15 years. It differs from the Robien law in the following ways :

• Rental caps, caps on tenants’ resources (which do not exist in the Robien law),
• Standard deduction of 30% of the rent received
• Under the Borloo law, it is only possible to rent the property to a descendant or to a parent/grandparent not belonging to the investor’s tax household after 3 rental years respecting the law’s conditions. In addition, the period when it is rented to parents/grandparents or descendants, which can last for a maximum of 9 years, means that the tax advantages are deferred.