Investing in Older Town-Centre Properties: Up to 21% Tax Reduction
Investing in French Town Centres in 2026: Renovation, Tax Incentives and Sustainability. The historic centres of France’s mid-sized towns are becoming one of the most attractive places to invest. Affordable prices, revitalisation programmes and tax incentives help fund their renovation. For sustainable real estate, the goal is clear: rehabilitate what already exists.
Why mid-sized town centres are attracting investors
In major cities, gross rental yields top out at around 3 to 4%. In towns such as Saint-Étienne, Limoges or Nîmes, they reach 8 to 10% according to 2026 market analyses. The past decline of historic town centres is what creates the opportunity: characterful, well-located buildings at low prices, provided you are willing to renovate.
The French State is backing this shift through the Action Cœur de Ville programme (more than 200 mid-sized towns) and the Petites Villes de Demain programme, both renewed from 2027 for the full term of the current municipal councils.
An investment that is eco-friendly by nature
Rehabilitating older buildings: a winning bet. The greenest building is often the one that already exists. By keeping a building’s foundations, walls and structure, you avoid most of the carbon emitted by construction.
Bringing town centres back to life. Vacant homes, run-down buildings, closed shops: many historic centres have emptied out in favour of the outskirts. Every renovated home brings residents back, and with them shops, services and neighbourhood life.
Meeting the ZAN target (zero net land take). Since the 2021 Climate and Resilience Act, France must gradually stop building on its farmland and natural land: the pace must be halved by 2031 and reach zero by 2050. Less and less will therefore be built on the outskirts, and people will have to be housed in what already exists. Renovating town centres is the sustainable way to create housing.
Getting rid of energy-inefficient homes. Homes rated G on the energy performance certificate can no longer be rented out since 2025; F-rated homes will follow in 2028 and E-rated homes in 2034. Renovating secures your rental income and adds green value to the property, while unrenovated properties lose value.
Car-free living. In a town centre, shops, schools, services and the train station are all within walking or cycling distance. It is the ideal setting for sustainable mobility, a real public health issue and an argument for tenants with a car-free lifestyle.
Preserving heritage. The historic centres of mid-sized towns have genuine architectural value. That is what our Heritage selection is all about.
Scheme | Tax benefit | Eligible properties |
Denormandie | Income tax reduction of 12 to 21% of the total cost, up to €63,000 | Older homes (flats or houses) in Action Cœur de Ville or ORT towns, with renovation work of at least 25% |
Jeanbrun (older homes) | Depreciation of the property deducted from rental income over 9 years | Flats in apartment buildings anywhere in France, with renovation work of at least 30% |
Property deficit (déficit foncier) | Up to €10,700/year deducted from total income, €21,400 when renovating an energy-inefficient home (until end of 2027) | Any older home let unfurnished |
Tax reduction of 22 or 30% of renovation costs, on up to €400,000 over 4 years | Buildings in a listed heritage area (site patrimonial remarquable) | |
Renovation costs deducted from total income, with no cap | Listed or registered historic buildings |
In mid-sized towns, Denormandie is the most targeted scheme. Example: a flat bought for €150,000, renovated for €50,000 and let for 12 years qualifies for a €42,000 tax reduction. Rents and tenants’ incomes are capped.
Will Denormandie be extended?
The scheme currently applies until 31 December 2027. On 8 October, the National Assembly’s finance committee voted to extend it to 2030: a renovation takes two to three years, and investors lack visibility.
But on 4 November, the National Assembly rejected the 2027 budget. From 20 November, the Senate will examine the government’s original version, without this extension, which it may reintroduce. We will have to wait for the outcome of the budget vote scheduled for 9 December before counting on the 2030 horizon.
Our advice before investing
1- Check real rental demand: jobs, students, transport links, vacancy rates in the area.
2- Get renovation costs quoted by certified (RGE) contractors before buying, with a 10 to 15% margin.
3- Review the building’s multi-year works plan and the area’s climate risks.
4- Compare the schemes.
Sources : LocService, SeLoger, La Gazette des communes, Maire-info, MyBase, Les Echos.