Optimize Your Wealth by Investing in a Rental Building
One of the most effective ways to achieve a high gross rental yield is to invest in an entire building. However, this strategy is generally suited to experienced investors capable of anticipating financial, technical, and rental challenges.
Owning a whole building provides full control over management decisions: tenant selection, rental strategy, renovation works, and long-term value enhancement. For greater peace of mind, property management can also be delegated to a professional in order to avoid time-consuming tasks related to maintenance, administrative management, and tenant relations.
To maximize profitability, it is advisable to focus on buildings composed of small units, from studios to one-bedroom apartments (T2). These formats are highly sought after in the rental market and typically offer faster tenant turnover.
A key factor in the success of such an investment lies in the acquisition price: it should be lower than the cumulative value of the individual units sold separately. These economies of scale significantly improve overall project profitability. In mid-sized cities, this type of operation can generate gross yields exceeding 10%, a level that is difficult to achieve with a single-unit investment.
Reducing Taxes Through Energy-Inefficient Properties
Investors with technical expertise — or those supported by qualified contractors — may consider targeting so-called “energy-inefficient properties.” These buildings offer strong value-add potential, provided renovation works are carefully planned.
They make it possible to benefit from numerous local and national subsidies dedicated to energy renovation, thereby reducing the overall cost of the operation. The remaining renovation expenses can generate a property tax deficit (déficit foncier), which is particularly attractive from a tax perspective.
This mechanism allows investors to deduct expenses exceeding rental income from their taxable income, significantly optimizing the net profitability of the investment. The strategy becomes even more attractive when part of a comprehensive energy renovation approach.
An Exceptional Property Tax Deficit Ceiling Until 2025
Since April 21, 2023, the ceiling for the property tax deficit deductible from overall taxable income has increased from €10,700 to €21,400 in the context of energy renovation works.
This measure applies to:
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renovation works carried out between January 1, 2023 and December 31, 2025,
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income tax returns filed in 2024, 2025, and 2026.
However, it is advisable to prioritize buildings located in areas without excessive architectural constraints. Certain districts subject to strict heritage protection or façade renovation rules may complicate administrative procedures and significantly increase renovation costs, ultimately reducing profitability.
