TLDR: You are concerned by these rules only for the tax reduction relating to an investment in a hotel residence for social purposes. The allocation depends on the date of the triggering event in relation to the family event, then on whether the property is allocated to one party or held in joint ownership. Death may allow the surviving spouse to retain the benefit subject to conditions.
The regime concerned and the triggering event
The rules described concern the tax reduction granted for an investment in a hotel residence for social purposes. They do not constitute a general rule applicable to all income tax reductions.
The triggering event corresponds to the completion of the new dwelling, its acquisition when this takes place after completion, or the receipt of renovation works. You must compare this date with that of the separation, divorce, termination of the PACS or death.
When the triggering event occurs before the event
If the triggering event occurs before the separation, divorce, termination of the PACS or death, the first share is allocated as a priority against the return of the couple subject to joint taxation. Any remaining balance may then be allocated against the relevant individual return, in accordance with the rules applicable to the situation.
For subsequent years, the shares are allocated against the individual return of the single, widowed or divorced taxpayer. The applicable ceiling remains that of couples subject to joint taxation when the triggering event occurs before the family event.
When the triggering event occurs after the event
If the triggering event occurs after the separation, divorce, termination of the PACS or death, the first share is allocated as a priority against the individual return of the single, widowed or divorced taxpayer. Any remaining balance may be allocated against the return of the couple subject to joint taxation, under the conditions provided for by the regime.
For subsequent years, the shares are allocated against the individual return. The applicable ceiling is then that provided for single persons.
Separation, divorce or termination of the PACS: allocation of the property
In the event of separation, divorce or termination of the PACS, you allocate the shares against the return of the spouse to whom the property is allocated when the community property is divided.
If the property remains jointly owned, you allocate the shares against both individual returns, in proportion to each party’s share in the joint ownership.
The new taxpayer who wishes to benefit from shares not yet allocated must request that the application of the regime be transferred to them, subject to compliance with the other applicable conditions.
Death and retention of the reduction
In the event of the death of a member of a couple subject to joint taxation, the shares are allocated against the return of the surviving spouse if the property is allocated to them in full ownership or usufruct.
If the property forms part of an estate held in joint ownership, the surviving spouse may not claim any reduction in respect of this property.
When the transfer of ownership results from death, you may request that the reduction be maintained for the remaining period if you are the surviving spouse to whom the property is allocated or who holds the usufruct. You must then take over the rental commitment in your own name, under the same conditions and according to the same arrangements.
For the period following the death, you must attach to the income tax return for the year of death a note prepared according to the template laid down by the administration. This note must restate the commitment to rent the unfurnished dwelling to the operator of the residence for the remaining duration of the initial nine-year commitment.
Withdrawal of the benefit
Separation, divorce, termination of the PACS or death occurring during the nine-year period covered by the rental commitment may result in the termination of that commitment and the withdrawal of reductions already obtained.
The mechanism for maintaining the benefit for the surviving spouse constitutes an exception when the conditions for transferring the property and taking over the rental commitment are met. If you do not take over this commitment, the reductions claimed by the previous taxpayer may be withdrawn.
For a single, widowed or divorced taxpayer who dies, the reductions obtained before death are not withdrawn. However, no reduction may be granted to their heirs in respect of the shares remaining to be allocated.