Inheriting an Energy-Inefficient Property in France: What Heirs Don't See Coming

Every year in France, thousands of estates include a property rated F or G on the Energy Performance Certificate (DPE — Diagnostic de Performance Énergétique). Since 1 July 2021, when the DPE became legally binding, inheriting an energy-inefficient property is no longer the same as inheriting an ordinary asset: it comes with regulatory constraints, existing or imminent rental bans, and a growing market discount. Yet inheritance tax is calculated on the gross market value of the property, with no automatic deduction for its energy rating.

The financial paradox is significant: heirs pay tax on the declared value of an asset that is, in practice, worth less than what the tax authorities assume. This article covers five dimensions: the regulatory framework depending on the DPE rating inherited; how inheritance tax is calculated and the room to factor in a DPE discount; the traps of joint ownership (indivision) and partition payments (soulte); available strategies to optimise the situation; and the most common mistakes to avoid.

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Are You Affected? Urgency by DPE Rating Inherited

First, identify the DPE rating of the property being transferred and its rental situation at the time of death.

Under the 3CL-DPE 2021 method, class G corresponds to a primary energy consumption above 420 kWh EP/m²/year. Since 1 January 2025, all class-G properties are banned from any new letting or lease renewal. Properties whose final energy consumption exceeds 450 kWh/m²/year are additionally subject to the minimum energy decency standard (decree of 18 August 2023) — a distinct threshold, measured in final energy, which may affect certain G-rated properties and, in rare cases, others.

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What the Tax Authorities Will Not Deduct: Inheritance Tax on an F or G Property

The Tax Base: Market Value at Date of Death

Inheritance tax on real property is calculated on the actual market value at the date of death, as defined under article 761 of the French Tax Code (CGI). This value corresponds to the price at which the property could be sold to an unrelated buyer under normal market conditions.

The estate declaration typically uses valuations from generalist estate agents or notarial transaction data (DVF), which may overvalue an energy-inefficient property if the comparables used include better-rated properties. Two risks coexist:

• Overvaluation: if the declared value does not account for the DPE discount, heirs pay tax on an inflated base — the tax authorities will not refund the difference if the property is later sold for less;
• Undervaluation: a documented DPE discount reduces the taxable base, but risks a tax reassessment if the administration considers it excessive (article 762 CGI). The discount must be substantiated, not merely asserted.

Inheritance Tax Rates for Direct-Line Heirs

For direct-line inheritances (parent → child), each heir benefits from a personal allowance of €100,000 on their net share received (article 779 I CGI), renewable every 15 years. Beyond that, the progressive scale under article 777 CGI applies:

Case Study: Estate of an F-Rated Flat in Paris, Three Children

Profile: 55 m² flat, Paris 13th arrondissement, rated F. Three equal-share heirs, no surviving spouse, no other significant assets in the estate.

Scenario 1 — Declared value with no DPE discount: €390,000

Scenario 2 — Declared value with 8% DPE F discount: €358,800

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The Joint Ownership Trap: When the Partition Payment Doesn't Reflect Reality

Default Joint Ownership (Indivision) and Its Consequences

When a property is inherited by multiple heirs, it automatically enters joint ownership (indivision): each heir becomes the owner of an undivided share (article 815 of the French Civil Code). This is the default position, unless the will assigns the property to a single heir or the heirs agree to an immediate partition. The same soulte and deadlock mechanics arise during a divorce involving an energy-inefficient property.

Joint ownership creates two specific problems with an energy-inefficient property. First, any decision to carry out significant works requires the agreement of all co-owners (article 815-3 Civil Code) — a major practical obstacle if one heir objects to the works or cannot fund their share. Second, if the property is let while rated G (banned since 1 January 2025), all joint owners are jointly liable as landlords — not just the one managing the property day-to-day.

A frequently overlooked practical point: applying for MaPrimeRénov' grants or an eco-PTZ loan within joint ownership requires, in principle, the agreement of all co-owners, or the prior appointment of a managing co-owner (gérant d'indivision) by formal agreement. Without this formalised consent, no heir can independently trigger the grant application needed to fund the works.

The Inflated Partition Payment (Soulte): Understanding the Risk

The soulte is the mechanism by which one heir buys out the others' shares to become the sole owner (article 826 Civil Code). It is calculated from the market value agreed in the partition deed. On an energy-inefficient property, two problems compound each other:

Problem 1 — The soulte is based on the gross value. If the partition value does not account for the DPE discount, the heir buying out the others pays an inflated soulte relative to the property's actual market value.

Problem 2 — Mandatory future renovation costs are not deducted. The heir who buys the property must fund all renovation works alone to keep the property lettable — costs that should have been integrated into the partition valuation.

Case study: soulte on the same Parisian F-rated flat

Three heirs (A, B, C), each owning one-third. A wishes to buy out B and C's combined two-thirds to become the sole owner.

The Surviving Spouse: Usufruct, Bare Ownership and Renovation Works

When the deceased was married and the surviving spouse opts for — or has the right to — usufruct (life interest), the property enters a split-ownership structure: the surviving spouse holds the usufruct (the right to occupy the property and collect rent), while the children hold bare ownership.

This creates a delicate situation with an energy-inefficient property. The usufructuary bears the letting obligation — they are the one who lets the property and collects the rent, and therefore the one who cannot relet a class-G property without works. But major energy improvement works (insulation, heating replacement) are, under article 605 of the Civil Code, in principle the responsibility of the bare owner. In practice, this allocation must be negotiated between the surviving spouse and the children — either by mutual agreement or through an explicit dismemberment agreement. The absence of any agreement can indefinitely block the renovation of a property that is meanwhile banned from letting.

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Regulatory Obligations That Apply from the Moment of Acceptance

Inheriting a G-Rated Property: Immediate Rental Ban

Since 1 January 2025, all class-G properties (primary energy consumption > 420 kWh EP/m²/year) are banned from any new letting or lease renewal, under article L.173-1-1 of the French Construction and Housing Code (CCH). This ban applies to heirs as soon as they accept the estate.

If the property was occupied by a tenant at the time of death, the existing tenancy continues until its natural end — the landlord's death does not terminate the lease (article 14 of the Tenancies Act of 6 July 1989). The heirs become landlords by substitution. However, when the lease expires, the class-G property cannot be relet without renovation works bringing consumption below the class-G threshold.

Moreover, if the final energy consumption exceeds 450 kWh/m²/year (a distinct energy decency threshold), the sitting tenant may, since 1 January 2025, demand works or refer the matter to the departmental conciliation committee (decree no. 2023-796 of 18 August 2023). This right applies to the heirs from the moment of acceptance, regardless of their prior knowledge of the DPE rating.

Inheriting an F-Rated Property: The 2028 Ban Won't Wait

For a class-F property, the rental ban takes effect on 1 January 2028 — less than two years away, with the 2028 rental ban already reshaping supply in the most exposed French cities. Heirs who intend to let an F-rated property must commission an energy audit and start works without delay: with typical lead times of 12 to 18 months (audit + grant applications + works), launching a renovation in 2027 to be compliant by 2028 is a serious gamble.

One possible development should nonetheless be flagged: the loi relance logement bill, announced on 23 April 2026 and presented to the Council of Ministers on 24 June 2026, would open a derogation allowing an F- or G-rated property to be let again under a works commitment — 3 years for a single-family house, 5 years in a condominium — through a works contract signed with a company. It would not be a postponement: the timetable under article L. 173-1-1 CCH would remain unchanged (G banned since 1 January 2025, F from 1 January 2028, E from 1 January 2034), entry into force would depend on implementing decrees, and nothing has been specified at this stage for tenancies already in progress. The Government's stated aim is to keep or return 650,000 to 700,000 homes to the market. This text remains a bill that has not been voted on to date: heirs cannot base any decision on its adoption, and the timetable above remains the only applicable rule.

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Four Strategies Based on Your Situation

Strategy 1 — Sell Quickly, Pricing the DPE Discount Into the Asking Price

If none of the heirs wishes to keep the property, selling is usually the simplest route. It must be properly prepared: the DPE must be recent (3CL method post-July 2021, valid 10 years) and the asking price must honestly reflect the discount associated with the energy rating. An F-rated property listed at the price of a D-rated one will not sell quickly — and running costs (property tax, service charges, vacancy tax in certain municipalities) keep accruing during the marketing period.

A swift sale at an adjusted price is structurally more advantageous than a prolonged sale at an inflated price, particularly in a market where investor-buyers are increasingly aware of DPE implications.

Strategy 2 — Renovate Before Letting or Selling

This strategy maximises the asset value, but requires two preconditions: the agreement of all joint owners and coordinated financing.

On financing, the eco-PTZ (up to €50,000, income-condition-free, combinable with MaPrimeRénov') and MaPrimeRénov' grants are accessible to heirs on the same basis as any other owner. In joint ownership, the grant application must be supported by all co-owners or a formally appointed managing co-owner — a written agreement between heirs is therefore essential before filing any application.

On agreement, if one co-owner blocks the works, article 815-3 Civil Code allows ordinary management decisions to be taken by a two-thirds majority of the undivided rights — but major energy renovation works are generally treated as acts of disposal, requiring unanimity. Where agreement is persistently withheld, judicial partition (article 840 Civil Code) is the ultimate recourse. The rental property deficit scheme (CGI article 156 I 3°, capped at €10,700 per year deductible against general income) is available to heirs who let the property under the actual-income tax regime after renovation.

Strategy 3 — Buy Out the Other Heirs, Negotiating the DPE Discount Into the Soulte

For an heir who wishes to retain the property alone, the key is to have the DPE discount recognised in the valuation agreed at the time of partition. As shown in the case study above, this negotiation can represent a €20,800 saving on the soulte — provided it is supported by a formal professional valuation and recorded in the notarial partition deed.

The buying heir must also factor in the total cost of the transaction: soulte paid to co-heirs + tax paid on their own inherited share + net cost of future renovation works. This total must be compared against the actual market value of the renovated property to assess the economic logic of buying out.

Strategy 4 — Renounce the Estate If Obligations Exceed Value

In extreme cases — severely degraded property, renovation cost close to or exceeding market value, significant debts attached to the estate — renunciation is an option (article 804 Civil Code). It must be formalised at the registry of the competent court within 10 years of the estate opening. However, any prior explicit or implied acceptance — taking possession, performing a management act, paying charges — permanently forecloses this option.

Summary: Four Strategies at a Glance

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Estimate Your Situation With Mon Simulateur Immobilier Simulators

Have you recently inherited a property in France, or are you anticipating an estate that includes an energy-inefficient property?

The Mon Simulateur Immobilier inheritance tax calculator computes the tax due based on the declared value, number of heirs, applicable allowances (direct line, siblings, nephews/nieces) and family relationship — with the option to factor in a DPE discount in the valuation to measure its impact on the tax due.

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Common Mistakes

Mistake 1 — Accepting the Estate Without Checking the Property's DPE Rating

An heir who unconditionally accepts an estate including a class-G property becomes the owner of an asset that cannot generate rental income without prior renovation works, and may face a sitting tenant's demand for works. Before any management action, consult the ADEME database (searchable by address, free of charge) or the deceased's documents to identify the DPE rating.

Mistake 2 — Declaring the Property at Full Value Without Documenting the DPE Discount

The market value declared in the estate deed is legally the value at the date of death — and an F- or G-rated property is objectively worth less than a comparable C-rated property, as the 2026 green value discount measured by the Notaires confirms. Failing to formalise this discount means paying tax on an inflated base, with no possibility of correction afterwards. Conversely, an undocumented discount risks tax reassessment.

Mistake 3 — Leaving the Property in Joint Ownership Without a Written Agreement on Works

Joint ownership is a transitional situation. A property in indivision where the co-heirs cannot agree on works or the property's future deteriorates every year while costs continue to accrue. Any joint ownership of an energy-inefficient property should be the subject of a written agreement within 12 months of the estate settlement, specifying: who manages the property day-to-day, how works are financed and by whom, and when a definitive partition will take place.

Mistake 4 — Ignoring the Surviving Spouse's Usufruct

If the surviving spouse has opted for usufruct, the children as bare owners may wrongly assume they have no obligation regarding the property during the usufruct period. This is incorrect: major energy improvement works are the bare owner's responsibility under article 605 of the Civil Code. Allowing a class-G or F property to deteriorate on the basis that "it is the usufructuary's problem" is a mistake that can lead to an unlettable property and a loss of value when the usufruct eventually terminates.

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Conclusion

Inheriting an energy-inefficient property means inheriting an asset whose value is being restructured by energy regulation. Inheritance tax law does not automatically reflect this reality — but nothing prevents you from making it count, provided you formalise it.

The case studies in this article illustrate this concretely: factoring an 8% DPE discount into the estate declaration for a €390,000 F-rated flat saves nearly €3,800 in inheritance tax. For the heir who buys out the co-heirs' shares, the same discount represents €20,800 less in soulte — roughly equivalent to the full net cost of future renovation works. These savings are not automatic: they require a documented valuation, a notarial deed that records it, and a strategy agreed between heirs before joint ownership becomes a deadlock.