Intermediate rental housing (LLI):
the new BOFiP of 8 July 2026

The LLI is a regime under article 279-0 bis A of the French Tax Code which applies the reduced VAT rate of 10% to supplies of new dwellings (or dwellings resulting from the conversion of business premises) acquired by legal entities to be let as main residences, at rents and to tenants subject to ceilings, in areas where the housing supply is under pressure. It targets the segment between social housing and the open market, and is accompanied by a tax credit in respect of the property tax.

It consolidates the doctrine following the public consultation opened on the version of 2 April 2025. The main contributions: confirmation of the regime for serviced residences operated under a commercial lease, treatment of dismemberment of ownership (reduced rate on the creation of the bare ownership, consequences of the termination of the usufruct), incorporation of the social-mix calculation of the Finance Act for 2026, clarification of the notion of a property complex, the regime for buildings completed less than five years ago, the chargeable event in an off-plan sale (VEFA), and the absence of clawback in the event of a transfer to a committed purchaser or of a vacancy with an active search for a tenant.

Under the formula introduced by the Finance Act for 2026: the number of social rental dwellings divided by the sum of the social and intermediate dwellings of the complex concerned must exceed 25%. Open-market dwellings in the programme are no longer counted in the denominator, which makes the threshold significantly more accessible in mixed programmes. The condition is set aside in certain situations, in particular for serviced residences.

Not necessarily. No additional VAT is due where the transfer is made to a purchaser that undertakes to continue the letting under the conditions of the regime. Otherwise, additional VAT remains payable on a decreasing scale based on the letting period already elapsed, the commitment lapsing after twenty years.

No, provided the vacancy remains temporary and the landlord can demonstrate an active search for a tenant on the terms of the regime (capped rents, tenants within income ceilings). Documenting this search (mandates, advertisements, steps taken) is decisive in the event of a tax audit.

Yes. The doctrine of 8 July 2026 confirms that the reduced rate applies to the creation of the bare ownership and that the usufructuary, a legal entity, may be the beneficiary of the regime. On termination of the usufruct, the regime is not called into question if the bare owner continues the letting under the required conditions. The precise structuring (duration, treatment of the commitments) must be calibrated from the outset.

Yes, under the conditions specified by the advance tax ruling BOI-RES-TVA-000064, updated on 8 July 2026. The transfer of the VEFA contract to an assignee that meets the conditions of the regime (eligible legal entity, intermediate-letting commitment) preserves the reduced rate of 10%: the assignor retains the deduction of the VAT paid on the earlier instalment calls, and the developer invoices the subsequent instalment calls at the reduced rate. An earlier version of the ruling had raised a debate on the characterisation of the assignment (unfinished building, with a 20% rate risk): the update of 8 July 2026 removes this difficulty. The drafting of the assignment deed and the verification of the assignee's eligibility remain decisive.

The LLI is a preferential regime within real-estate VAT: the transaction remains subject to the general rules governing supplies of new buildings (taxable-person status, chargeable event, right to deduct), with the 10% rate replacing the standard rate. The analysis of an LLI transaction therefore always ties in with the ordinary rules of real-estate VAT, in particular in a VEFA and in the event of a resale within five years of completion.