This paper investigates the impact of the Denormandie tax incentive, introduced in

2019 to promote the renovation of dilapidated housing in medium-sized French munic-

ipalities. The study employs a spatial di!erence-in-di!erences framework, exploiting

geographic discontinuities at municipal boundaries induced by the policy to identify

causal e!ects. The analysis focuses on areas within a 1–5 kilometer range of the policy

boundary to ensure robust identification while addressing potential spillover e!ects from

neighboring untreated zones. The findings reveal a 19% increase in building permits

and a 32.3% rise in renovated rental units within the treated zones. Additionally, vacant

housing sales increased by 18%, reflecting the reintegration of underutilized properties

into the active housing market. These impacts were resilient to displacement e!ects and

robust to di!erent distance specifications. Furthermore, the policy induced a tempo-

rary 2% decline in older housing prices, which dissipated within two years as the market

adjusted. This study highlights the e!ectiveness of renovation-focused tax incentives in

addressing housing market ine"ciencies and fostering urban revitalization. The find-

ings o!er actionable insights for policymakers seeking to balance housing a!ordability

with urban regeneration objectives.

Keywords: Public Policy, Housing Price, Di!erence-in-Di!erences, Dynamic treat-

ment e!ects.

JEL Codes: R31, R38, C23, H71