Real estate investment remains one of the safest ways to supplement your income and build up a lasting heritage. The point is in detail in this article.
When? How? ‘Or’ What? What opportunities to mobilize? Unlike stock market investments, real estate investment is less impacted by economic conditions. Unless there are exceptional circumstances (radical change in the environment of the property, significant deterioration of the building, etc.), it is rare to see a property depreciate in the medium or long term, quite the contrary. The profitability of real estate investment also benefits from numerous tax exemption systems.
1. To optimize the budget allocated to your main residence
By investing in real estate, you can choose to own your home. The amount of money you spend each month on housing is thus allocated to creating or increasing your wealth.
Note also that the total abolition of the housing tax by 2020 will also lighten the final bill.
Another advantage of being a homeowner: you have total control over your home. You start the work you want, you sell when you want and you are no longer subject to the vagaries of the rental lease, such as leave.
2. To build up a lasting heritage
The real estate investment is one of the most interesting investments to build a sustainable, without having an income of an exceptional standard. The first stone to the building is most often the purchase of its principal residence, prolonged by other goods put in hiring
The leverage effect of the credit and the various tax advantages linked to leasing allow you to build an estate without providing a significant savings effort. Real estate investment also appears safer than financial products placed on the stock market and presents a return on investment more attractive than savings products. The life insurance yield is currently below 2% net of social security contributions, while that of real estate can climb up to 7%.
3. To quietly prepare for your retirement
Retirement generally rhymes with a drop in income, on average around 25%. At the same time, daily expenses are increasing, especially those related to healthcare costs. To anticipate the future and obtain additional income upon retirement, property investment is an ideal solution.
Most often, the mortgage is reimbursed before retirement. Keeping the purchased accommodation therefore makes it possible either to find accommodation without paying rent or to rent it out to receive additional income.
4. To protect your family
Real estate investment, financed by rents received and optimized by tax savings, is an alternative pension solution to build wealth while protecting your family from the vagaries of life.
As a safe haven, real estate is more resistant to deteriorating economic conditions and inflation. The property is therefore bound to increase in value over the years. And the risk-taking is less for relatives since the lending banks require investors to take out loan insurance to assume the repayment of monthly payments or capital in the event of death or disability. The heirs will therefore not have to pay a possible debt on the property.
5. To reduce your taxes
Finally, if real estate investment is among the preferred investments, it is because it allows substantial savings to be made thanks to income tax reduction devices. These are aimed at all investor profiles and for all projects.
In new real estate, for example, you can get up to 21% tax reduction over a 12-year period thanks to the rental investment scheme. The law allows you to achieve 11% savings on the cost price of a furnished property in service residence.
The rental investment scheme offers investors buying new real estate to rent it to obtain a tax reduction of up to 21%, over a period of 12 years.
To benefit from it, you must respect relative conditions:
Type of property:
Previously, only new property or property sold in a future state of completion was eligible for a rental investment scheme. The accommodation must also respect a certain level of energy performance, which varies depending on whether it is new, to be built, or old with work.
In the area in which it is located:
To take advantage of the rental investment scheme’s advantages, you must acquire a property located in an area under land pressure (where housing demand is greater than supply).
To the tenant:
The property rented in the rental investment scheme must constitute the main residence of the tenant. In addition, the latter’s annual taxable income must not exceed certain resource ceilings, which depend on the number of occupants in the accommodation and the area of settlement.
Rental caps:
Investors must comply with rental ceilings set by law, on average 10 to 20% lower than those on the market in cities with high land pressure. The savings made on taxes offset this decrease in rental income.
During the rental period of the property:
To benefit from the tax reduction, investors must offer the property for rental for a minimum period of 6 years. This can be extended at most twice, up to a limit of 12 years.
The tax benefit granted depends on the duration of the rental. It amounts to 12% of the price of housing for 6 years, 18% for 9 years, and 21% for 12 years. The tax reduction applies each year depending on the duration granted.
