Today, rental investments allow you to reduce taxes when building a real estate portfolio. If some services are very attractive, be careful not to make a mistake, the wrong choice can cost you dearly.
Another six months to reduce taxes next year
The arrival of summer is a sign that 2022 is already halfway over. So, from a tax perspective, you still have a few months to figure out the best way to reduce your 2023 taxes based on your 2022 income. In practice, although there are many solutions, real estate is and always will be a weapon. in reducing taxes.
Pinel’s law, which has been in effect since 2015, is consistent with Celier’s law and Duflo’s law. This law is necessary if you have a new rental investment project because of the benefits it offers. Refers to an incentive method that primarily supports the construction of rental investment properties.
The Pinel tax abatement is available to owners who agree to rent their home for at least 6 years at a below-market rate. More precisely, 20% lower than the rates practiced by the sector. Housing must also meet other criteria that are often considered real investment restrictions.
However, this investment allows you to benefit from a reduction in income tax: 12% for 6 years of the lease, 18% for 9 years and 21% for 12 years, depending on the purchase price of your property. it is new or the cost of the work done if the property has been repaired.
According to Pinel’s law, your real estate investment must not exceed €300,000 per year per taxable household and €5,500 per square meter. This means that purchases of €300,000 are taxed at the zero rate up to €63,000.
The law then allows you to become a landlord without paying any fees, meaning your purchase will be recouped through the monthly rent paid by the tenant. Under Pinel’s law, you can also rent the property to your offspring or offspring.
Tips to Avoid Pinel’s Law Mistakes in 2022
If you see Pinel’s Law as just a means of declaring deductible expenses and expenses in order to benefit from tax credits, you’re on the wrong track. Although a buy-to-let investment offers certain tax advantages, it is also a long-term investment. It involves a lot of self-projection and spending time gathering a lot of information.
The most common and most damaging mistake many investors make when buying real estate is planning on their own without taking the necessary steps. To avoid unpleasant surprises, it is necessary to have an external and objective opinion.
As this is primarily a large project, you will have to rely on proper advice. Do not choose the location of your real estate without taking into account all objective, neutral and cold criteria. First of all, you need to make sure that the market you are investing in is a sector that faces high demand.
Note that the Pinel system will evolve in 2023 and 2024. From January 1, 2023, the current Pinels will be replaced by Pinel with a reduced rate and Pinel+. Each of them is subject to different conditions.
For both, the tax deductions will always depend on the length of the tenancy commitment, as well as the DPE (Diagnostic Energy Performance) of your investment. Thus, in 2023, only objects of classification not lower than B (according to RE2020 criteria) will be entitled to a tax discount.
For better resale prospects, prioritize human-scale programs. For example, a small 40-50 unit condominium or detached house will have fewer properties comparable to yours in the medium term.