Top 10 of The Most Profitable Investments For Tax Exemption in 2023?
The return net of tax on an investment makes it possible to determine whether the latter will make it possible to generate a certain profit, which can be a profit or also a reduction in taxation, which would amount to increasing capital or purchasing power. Profitability makes it possible to check the consistency of the investment and its financial potential. Here is an inventory of the 10 most profitable investments for tax exemption in 2023, listed here in no order of profitability.
No. 1: The Pinel real estate system
Probably the best-known real estate tax exemption scheme, the Pinel scheme was introduced by the 2015 finance law, notably replacing the Duflot scheme. Investing in stone is known to be a profitable and reliable investment. Investing in Pinel is even more so. Indeed, by investing in unfurnished housing, new or in the future state of completion (VEFA), and presenting a satisfactory energy performance, it is possible to take advantage of the Pinel system. This imposes ceilings in the fixing of the rent, but also on the resources of the tenants.
Thus, by being part of a process of renewal of the private housing stock with rents accessible to low-income households, the State allows progressive tax exemption according to the duration of the rental commitment. A tax reduction equivalent to 12% of the amount of the investment may be granted for a rental period of at least 6 years. In the same logic, 18% will be deductible for 9 years of rental, and 21% for 12 years. The tax benefit is spread over the entire duration of the commitment, capped however at €300,000 and €5,500 per m².
The investment is profitable and does not necessarily require a contribution. Indeed, the proposed tax exemption, combined with the collection of rents, makes it possible to amortize the monthly payment of the credit rather easily, which convinces the bank to grant the loan without contribution.
No. 2: The Censi-Bouvard real estate system
Less known, it is nevertheless just as tax-efficient as the Pinel device. On the other hand, it is aimed at investors in new furnished residences, such as senior residences or student residences. The accommodation will then have to be rented by commercial lease to an operator, who will himself be responsible for selecting the tenants and assuming the management of the accommodation. The operator will therefore be remunerated by the rents paid by the tenants, increased in relation to the rents that he himself will pay to the investor.
The investor will then be able to recover the VAT on the amount of his investment, on the condition that the operator of the real estate residence offers at least three services in addition to accommodation. Also, the Censi-Bouvard device allows you to benefit from the same tax exemption as Pinel: 12% for 6 years of rental, 18% for 9 years, and 21% for 12 years or more. It is therefore a great tool for tax exemption. Finally, by acquiring the status of LMNP (Non-Professional Furnished Rental Company), the investor will then be able to deduct the depreciation and all the related charges.
No. 3: The Denormandie real estate system
This system applies to unfurnished accommodation, acquired as is and requiring major renovation work, representing at least 25% of the investment. Housing will have to be part of the national program “Action heart of the city” to revitalize city centers. By giving it back a satisfactory level of energy performance, and on the synéquanone condition of renting it out for at least 6 years at the end of the rehabilitation work, the system allows the tax exemption of the sums incurred for the renovation. Also, the resources of tenants and the amount of rent will be capped to facilitate access for more modest households to housing in the heart of the city.
In a proportional and progressive manner, the investor will be able to claim a reduction of 12% of the net cost price of the property on his income tax for at least 6 years of rental, and gradually, 18% for 9 years and 21 % for 12 years and over. However, the reduction will be capped at €300,000 of the net cost price of the property.
No. 4: The Malraux real estate system
Like the Denormandie device, the Malraux device applies to investment in the old. But if the first concerns housing located in city centers or town centers to be revitalized or revitalized, Malraux concerns housing requiring heavy renovation work, recognized as part of the French historical and aesthetic heritage to be preserved. The accommodation must therefore be or be part of a so-called remarkable building. By working to safeguard France’s architectural heritage, the investor is also helping to increase the supply and rental value of historic town centres.
The State recognizes this effort by allowing the investor to benefit from a tax reduction of up to 30% of the total amount of the work undertaken, with however the obligation to rent out the renovated property for at least 9 years. The big advantage? The Malraux scheme is excluded from the ceiling for tax loopholes set at €10,700 per year and per taxpayer, all tax exemption schemes combined.
No. 5: Invest in SCPIs
Investing capital in a Civil Real Estate Investment Company, or an Organization for Collective Real Estate Investment is a good way to increase your assets, while taking advantage of the associated tax exemption. Indeed, the investor only acquires capital shares of the SCPI, and this has several advantages. First, to free oneself from the constraints linked to the acquisition of real estate. Investing in shares does not confer full ownership, therefore not the enjoyment of the property.
In addition, by investing in SCPIs in bare ownership, the usufruct is transferred to a manager, and the share acquired concerns only the abusus, therefore the bare ownership only. It is therefore a long-term investment, which does not generate property income and therefore does not increase taxation. Better still, some property deficit SCPIs create a burden for investors who can deduct it from their income taxes, in proportion to their share. It is a very good investment.
No. 6: Invest in life insurance
Life insurance is probably the most interesting savings product of its generation. It is very flexible and has adapted to the needs of savers, who increasingly wish to become investors. With no obligation of either amount or recurrence, the capital injections are placed in secure or riskier products, offering more or less significant potential for profitability. Each payment is tax-exempt from the annual income. Thus, the benefit is double: the income to be declared is reduced as much as the total of the payments made in the year, therefore the taxation is less important; and the capital invested grows to grow a savings accessible when it suits its subscriber.
No. 7: Invest in a Retirement Savings Plan
The PER is a recent product which came to replace its predecessors which did not fully satisfy savers because they did not meet their real expectations. The PER is now accessible to all, without any conditions, neither of resources, nor of situation or age. Its operation is roughly based on that of life insurance, in particular on the possible growth of capital. On the other hand, the savings placed there are blocked until retirement, except in the exceptional case of an accident in life. Equally profitable and with the same tax advantages, it remains a notch below the flagship life insurance product.
No. 8: Invest in SMEs
Through Mutual Funds for Innovation (FCPI), or Local Investment Funds (FIP), financial investment in innovative and promising Small and Medium Enterprises (SMEs) is welcomed by the State. by an 18% reduction in the amount invested on income tax. This reduction percentage was pushed to 25% on the 2021 tax return, to satisfy the economic recovery. The investor then becomes a shareholder of the company to the extent of his investment, and thus benefits from a share of the profits generated. It is therefore a largely profitable investment, in growth or largely promising sectors.
However, this investment must be thought over the long term. The invested capital is blocked for at least 5 years. Tax exemption, therefore the desire to reduce your monthly tax deduction now at source, should not impact the budget too hard and thus make the end of the month untenable. This process will therefore not be suitable for all taxpayers.
No. 9: Invest in SCI
The Société Civile Immobilière is traditionally family owned, but it is not an obligation. It consists of the acquisition of real estate by at least two people, each of whom becomes a partner. In fact, not being direct owners of the property, they hold shares in it. This approach allows you to build up a heritage while being able to transfer your shares to your children as soon as they come of age, on their death, or otherwise.
Depending on the separation of ownership chosen between partners, it is possible to have only the bare ownership and have nothing to declare for taxes. Also, it is possible to deduct from its taxes all the charges relating to the maintenance and maintenance in good condition of the dwelling. This generates a land deficit which then allows a tax reduction. Finally, the SCI allows the donation without the application of transfer duties and without having to pay donation fees as long as the value of the shares transferred does not exceed €100,000 per child and per fifteen years. .
No. 10: Invest as a Furnished Rental Company
Furnished renter is a very advantageous status. The investor must respect the conditions linked to the status, in particular by acquiring furnished accommodation, whose rental income will be capped at €23,000 to maintain the non-professional status, and which must also be less than or equal to the other income generated by the all persons in the tax household. The property must comply with the standards of decency defined by law, be for residential use only, and include the mandatory equipment also defined by law.
Two tax regimes are available to him: that of the micro-BIC which applies by default. It provides for a flat-rate allowance of 50% of annual revenue from furnished rental activity, increased to 71% for furnished tourist accommodation. Otherwise, he can opt for the simplified real regime, without flat-rate allowance, which will allow him to deduct all of his expenses and depreciation, generally reaching more than 50% of annual revenue. The taxation offered to investors who rent a furnished apartment is extremely attractive.