Real estate: 3 devices you must know for tax exemption

Real estate: 3 devices you must know for tax exemption

Investing in the real estate market Not a decision to be taken lightly. The various laws in force come to frame this market. Many French people choose to invest in rental properties, as they see it as an effective income generation solution. However, we should also consider the various risks that this can involve: Unpaid rentsDamage, fees, etc. Exemption from property taxes is one reason for this madness inrental investment. A reliable and wise investment, building or buying a property and then renting it is the solution r reduce the amount of income tax. Therefore, the state prefers this type of project and puts in place various mechanisms:

Tax credit for your assets through Pinel Law

Filed under Article 5 of the Law of December 29, 2014 of the General Tax Code, and Benell’s law It replaces Duflot’s law But it works the same way. This system encourages housing construction on French soil and thus makes it possible Reducing the family tax base. The advantages of this system are many for the taxpayer who can realize his project with little or no financial contribution. Of course, in order to be able to take advantage of these tax benefits, the investor must be taxable in France and be at least 18 years old. The property must also be leased for more than 6 years as defined in the site infographic invest.

On the tenant side, Pinel aims to make these buildings accessible to as many people as possible. These residences are between social housing and upscale housing. There is a mathematical formula that you must know to be able to determine the maximum rental ceiling for Pinel residences:

Surface useful x Benyl modulus x Benyl scale

It is important to note that the rental calculation depends on the area in which the property is located. Pinel’s law device, in addition to the tax reduction, allows you to deduct taxes from the actual expenses below:

  • loan interest,
  • loan guarantee fee,
  • property tax,
  • insurance fee ,
  • housing maintenance and repair costs,
  • Any costs related to the salary of the caretaker and/or the building concierge.

Take advantage of old tax benefits

By investing in an old property, the owner will get to work. regeneration and Rehabilitation of old dwellings It is an effective technique to be able to Take advantage of the tax cut. This is explained by the fact that businesses infinitely deduct the required rents which results in lower taxable income. Be careful, the investor can only benefit if the business represents 25% of the total amount of the acquisition.

Then, he will have to respect the various conditions related to Rental ceiling, duration of commitment, geographic area, etc. This part of the real estate tax credit, also called a “denormandie machine”, allows you to take advantage of the reduction of 2% (if you rent or hold the property for 6 years), 18% (for 9 years) or 21% ( for 12 years) of the amount invested. It is important to be well versed in this technique because some work is not deductible.

Censi-Bouvard’s law

The Censi-Bouvard system, adopted by the French National Assembly in 2009 and also called the “Bouvard Amendment”, gives tax breaks when a taxpayer invests in furnished housing that falls into one of the following categories:

  • Student accommodation
  • Senior Citizen’s Accommodation
  • Tourist accommodation

With the Censi-Bouvard system, the investor benefits from a tax reduction on the value of the acquired property. For 2022, it is set at 11% of the housing price excluding tax, with a maximum of €300,000 excluding tax. The commercial lease contract signed between the operator and the buyer must be for a period of between 9 and 12 years. It is important to note that a file LMNP case (non-professional furnished rental company) and Censi-Bouvard device Compatible and cumulative.

Cos’ Law or “Affordable Rent”

The Cosse Act was introduced at the beginning of 2017, and gives owners the possibility to rent property at a rent suitable for the most modest families, as specified on the site. emo. To certify this device, the owner must first:

  • Signing an agreement with Anah (National Housing Agency), which includes 6 years without work (or 9 years if the owner benefits from employment assistance).
  • Obligation to rent out their housing for the duration of the agreement.

This law gradually complements the Denormandie system and may apply to any purchase made through December 31, 2022.

These three systems are among the most exploited in real estate tax relief. As this sector of activity is constantly evolving, the solutions available to you when investing are perhaps more or less beneficial, depending on your budget, project and asset management.

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