Property deficit and energy renovation: the 21,400 euro cap
For works that take a dwelling out of energy-sieve status, the property deficit offset cap rises to 21,400 euros, extended to the end of 2027. Conditions, EPC class jump and a worked calculation.
Expert note: This article was written by our chartered accountancy firm. Information is current as of 2026. For a personalised review of your situation, contact us.
Quick answer. When works move a let dwelling from class E, F or G to at least class D, the cap of property-deficit offset against overall income doubles, from 10,700 to 21,400 euros per year. The 2026 finance law extended this scheme for expenses paid up to 31 December 2027. Aids received, such as the energy renovation grant, are deducted from the works: only the remaining cost enters the calculation.
The doubling of the property deficit is one of the rare schemes that reward the renovation of energy sieves with a tax benefit. Well used, it erases up to 21,400 euros of tax per year instead of 10,700. But it follows precise conditions of energy class and timing, and the treatment of aids is often misunderstood. Here is the mechanism, with a worked calculation.
The principle of the doubling to 21,400 euros#
The classic property deficit offsets overall income up to 10,700 euros per year. The energy scheme doubles this cap.
For eligible dwellings, the cap of property-deficit offset against overall income rises to 21,400 euros per year, up to the amount of the energy renovation works (Tax Code art. 156). Above this cap, the surplus remains carried forward against property income for the following ten years, as for an ordinary deficit.
This doubling aims to speed up the exit of energy sieves from the rental stock, by offering an immediate tax counterpart to the owner who renovates. It fits the overall logic of deductible charges described in our article on loan interest and deductible charges.
The energy class jump condition#
The doubling is only acquired if the works genuinely improve the dwelling's performance.
The asset must move from class E, F or G before works to class A, B, C or D after works. This jump is proven by an energy performance certificate carried out before the works begin and a second after their completion. Without this double proof, the cap stays at 10,700 euros. The works must also correspond to eligible expenses, such as insulation, efficient heating or ventilation.
The timing: up to 31 December 2027#
The scheme is temporary, but its window has been extended.
Introduced by the amended finance law for 2022, it was extended by the finance law for 2026 for expenses paid up to 31 December 2027. It is the payment date of the works that counts, which invites planning the settlement of invoices within this window to secure the raised cap.
Worked calculation: aids deducted, remaining cost offset#
The most misunderstood point is the treatment of renovation aids.
The grants received, such as the energy renovation grant or energy-saving certificates, must be deducted from the amount of the works: only the remaining cost enters the property deficit. Take an example. An owner commits 30,000 euros of energy works and receives 8,000 euros of aids. The remaining cost is 22,000 euros. After offsetting the other charges against the rents, the deficit deductible from overall income is capped at 21,400 euros the same year, the balance of 600 euros remaining carried forward against property income. For a taxpayer whose marginal band is 30%, the income-tax saving approaches 6,400 euros the first year, to which the social-levy saving on the erased property income is added.
| Step | Amount |
|---|---|
| Energy renovation works | 30,000 euros |
| Aids received (renovation grant, certificates) | 8,000 euros |
| Deductible remaining cost | 22,000 euros |
| Maximum offset against overall income | 21,400 euros |
| Balance carried forward against property income | 600 euros |
Our view#
The doubling of the property deficit is a genuinely advantageous scheme for a landlord renovating an energy sieve, provided three points are respected: the class jump proven by EPC, payment within the window up to the end of 2027, and the deduction of aids from the offsettable amount.
The most frequent mistake is to offset the gross cost of the works without subtracting the grants, which exposes to a reassessment. We recommend framing the project upstream: quotes, payment schedule, EPC before and after, and a calculation of the net remaining cost. Well managed, the scheme combines asset value, energy compliance and tax saving, a rare alignment that it would be a shame to miss for lack of anticipation.
A common case#
A landlord held a flat rated F, hard to let and threatened by the rental restrictions on energy sieves. He hesitated to undertake heavy works. The simulation showed that a renovation bringing the asset to class D opened the 21,400 euro cap, and that, aids deducted, the remaining cost was largely erased by the tax saving over two years, taking the carry-forward into account. The project was launched with a pre-works EPC, a payment schedule before the end of 2027, and rigorous tracking of invoices net of aids. The asset left the energy-sieve status while lightening the owner's taxation.
Frequently asked questions
What is the property deficit cap for energy renovation?+
The cap of offset against overall income rises from 10,700 to 21,400 euros per year when the works move the dwelling from class E, F or G to at least class D (Tax Code art. 156). The surplus remains carried forward against property income.
Until when does the scheme apply?+
It was extended by the 2026 finance law for expenses paid up to 31 December 2027. It is the payment date of the works that determines eligibility for the raised cap.
How are aids like the renovation grant treated?+
They must be deducted from the amount of the works: only the remaining cost enters the property deficit. Offsetting the gross cost without subtracting the grants is a mistake that exposes to a reassessment.
Do you need an EPC to benefit from the doubling?+
Yes. An energy performance certificate before works, showing a class E, F or G, and a second after works, showing at least a class D, are needed to prove the class jump and secure the 21,400 euro cap.
What happens to the deficit above 21,400 euros?+
The surplus, as well as the fraction of deficit linked to loan interest, remains carried forward against property income for the following ten years. Only the offset against overall income is capped.
Does the scheme also concern assets in an SCI?+
It applies to property income, so to an SCI at income tax whose partners are taxed in this category. An SCI at corporate tax instead follows the corporate-tax rules, with depreciation, not the property-deficit mechanism.
Key takeaways#
- The cap of property-deficit offset against overall income rises to 21,400 euros for energy renovation works (Tax Code art. 156).
- The dwelling must move from class E, F or G to at least class D, proven by an EPC before and after works.
- The scheme is extended for expenses paid up to 31 December 2027 (2026 finance law).
- Aids received, renovation grant and certificates, are deducted from the works: only the remaining cost is offsettable.
- The surplus above 21,400 euros remains carried forward against property income for ten years.
- The scheme targets property income, so direct holding or an SCI at income tax, not an SCI at corporate tax.
Article written by the Hayot Expertise firm, registered with the Order of Chartered Accountants of Ile-de-France. Updated for 2026. This article is for information purposes and does not replace an analysis of your own situation.
Article written by Samuel HAYOT
Chartered Accountant, registered with the Institute of Chartered Accountants.
Regulated French accounting and audit firm based in Paris 8, built to support companies across France with a digital and decision-oriented approach.
Sources
Official and operational sources cited for this page.
This topic is part of our service Tax accountant in Paris | CIT, VAT & tax audits
Need a quote or personalised advice?
Our accountancy firm supports you through all your steps. Get a free quote to review your situation and receive a bespoke fee proposal, or contact us directly.