Investing In Real Estate: For What Purposes? [ Excluding Housing ]
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Investing in real estate is the dream of many French people who have sufficient capital. We have heard for years that it is the most reliable and secure investment, given the perfect health of the market. But what are really the achievable objectives of an investment in stone, outside of a home? Answer.
Why invest in real estate?
Investing in real estate is the choice of many French people who have an envelope allowing them to make smart investments. As we all know, real estate has been one of the most buoyant sectors for years, which generally guarantees the capital invested and even promises great capital gains. Apart from his main or even secondary residence, investing in real estate meets several objectives set by the investor.
- Land income: Acquiring a property to rent it out obviously has the primary purpose of collecting land income, therefore making a profitable and sustainable investment. This is the guarantee of a permanent cash flow, except for vacancy of rent of course;
- Tax exemption: It must be said, the many tax exemption systems put in place make investment in stone even more attractive. Some offer reductions corresponding to a percentage of the investment or flat-rate allowances, others partly tax-exempt the capital gain generated on resale, while still others allow the deduction of works and renovation expenses from tax. , then considered as a land deficit, etc. ;
- Capital gains: Certain investments in real estate companies make it possible to make significant capital gains on capital outflow. The shares are obtained discounted, therefore below their real value on the market, and are multiplied by the outflow of capital, by the delta of the discount, and by a real estate market which continues to increase;
- The constitution of a heritage: Obviously, investing in real estate makes it possible to create a heritage which will always be recoverable, either by resale, or by planning to house the children there, or by the good of a family investment. or grouped;
- A facilitated transfer of assets: By investing in real estate via real estate companies, it is possible to bequeath your shares to your heirs up to €100,000 every 15 years per parent, without inheritance tax. apply.
How to invest in real estate?
There is the classic investment, which consists of buying a property to rent out. But it is to be assumed that investors who have sufficient financial resources to acquire real estate are taxable, and also hope to be able to tax this capital invested or the property income generated. To do this, several devices exist, which can be broadly grouped under two categories: acquiring real estate in your own name, or investing capital in real estate companies.
The Pinel device
It is the best-known real estate tax exemption scheme because it is one of the most attractive for investors. By acquiring a new home or off-plan, meeting RT2012 standards in terms of energy performance, the investor can register in the Pinel system. He will then undertake to set a regulated rent amount and only rent to tenants with capped annual resources to give access to new housing to the most modest households. Thus, depending on the duration of the rental of the property, of at least 6 years, 9 years or 12 years and more, the investor will be able to claim a reduction in his tax of respectively 12, 18 or 21% of the amount total invested
The Denormandie device
The acquisition of an old and unfurnished property, requiring heavy work to bring it up to standard, in particular energy performance, for at least 25% of the total amount of capital invested, will make it possible to register in the Denormandie system. This offers a tax reduction spread over time, depending on the duration of the rental: 12% of the capital invested for 6 years of rental, 18% for 9 years, and 21% for 12 years and more. However, the reduction will remain capped, calculated on a maximum total investment of €300,000. Housing will have to be part of the national program “Action heart of the city”, which aims to revitalize city centers and town centers by rehabilitating housing that is too old, declared indecent.
The Malraux device
This device is accessible to real estate investors in the old unfurnished to renovate. The accommodation must be recognized as a “remarkable building”, and be part of the desire to safeguard the historical and aesthetic heritage of France. By acquiring a property to be completely renovated, without altering the structure of the property, the investor will be able to claim a tax reduction of up to 30% of the total amount of the work undertaken, with an obligation to rent for at least 9 years.
The Censi-Bouvard device
By acquiring a new and furnished property, located within a residence, senior or student type for example, the investor will be able to take advantage of the Censi-Bouvard system, on the condition of renting his property through a commercial lease. . This means that he will have to rent it to an operator, who will himself set and collect the rents from the tenants. Thus, the investor will be able to recover the VAT on the amount of the investment, and benefit from tax exemption for the duration of the rental, i.e. 12% of the investment for 6 years of rental, 18% for 9 years, and 21% for 12 years or more. The tax exemption will be spread over as much time as that of the rental. Sometimes, the expenses and depreciation of the investment will even be deductible.
LMP or LMNP status
The status of Professional or Non-Professional Furnished Lessor is accessible to any investor who acquires a furnished property for residential use. He will then be able to benefit from a flat-rate allowance of 50% of the annual income from the activity, or from a deduction of charges and depreciation relating to the acquisition of the property, depending on whether he chooses the micro-tax system. BIC or real.
Invest in SCPI
The real estate investment company allows you to increase your assets, without having to fulfill the obligations related to the property, such as the inventory of entry and exit, the follow-up of the annual interviews, the re-invoicing of local taxes, etc. . The investor then holds a share of the capital of the SCPI, and benefits from a share of the land income up to the height of his investment and his capital shares. Bare ownership SCPIs exist to invest only in bare ownership. Without property income, the acquisition is not taken into account in the calculation of real estate wealth tax, and taxation is not impacted.
Invest in SCI
The Société Civile Immobilière is created on the initiative of a group which may or may not be related. Each investor then becomes a partner when he injects capital into the company. Thus, everyone holds shares up to their investment capacity. The SCI owns the real estate assets. This investment facilitates the transfer of assets through the sale of shares. To partially escape inheritance tax, each parent can assign €100,000 every fifteen years to each of their heirs, free of charge.