The summer period is a sign that half of 2022 is behind us. From a tax perspective, you have a few months to figure out the best way to reduce your 2023 taxes based on your 2022 income! In practice, while there are many solutions, real estate is still and always an effective weapon for reducing taxes.
Pinel’s Law Rental Investments: Controlled Tax Abatement
The Pinel tax abatement is granted to owners who agree to rent their home for a minimum of six years, with the rent set below market rate. More precisely, 20% below the rates practiced in the sector! In short, the property has:
- be purchased new, in a future state of completion (VEFA) or have been refurbished and refurbished;
- to be naked, i.e. without furniture;
- to be rented out only as a primary residence;
- be located in a collective building and in an area where the relationship between demand and supply of housing is considered close (A bis, A or B1);
- comply with a certain level of energy efficiency according to the BBC 2005, RT 2012 or RE 2020 standards;
- be completed within 30 months from commencement of work and permitted within 12 months from delivery;
- rent to tenants whose taxable household meets Pinel’s law resource limits, which vary by district where the property is located.
Of course, these are real limitations from the point of view of investment. However, they allow you to benefit from a nice reduction in income tax: 12% for six years of the lease, 18% for nine years and 21% for 12 years, calculated in relation to the purchase price of your property (if new) or the price acquisition and performed works in the case of restored property. According to Pinel’s law, your real estate investment must not exceed €300,000 per year and per family with tax, and €5,500 per m2. This means a tax exemption of up to €63,000 on a €300,000 purchase.
Note that in 2023 and 2024, Pinel’s Law changes and becomes even more complicated!
In 2023 and 2024, the tax reduction rates that allow you to take advantage of the Pinel system change. And this, down! 2022 is indeed the last year to take advantage of the existing Pinel system. From January 1, 2023, the current Pinel will be replaced by Pinel at a reduced rate and Pinel+. Each of them is subject to different conditions. In both cases, the tax reduction will always depend on the length of the rent, as well as the DPE (Diagnosis of Energy Efficiency) of your investment. As a result, in 2023, only objects of classification not lower than B (according to RE2020 standards) will be entitled to a tax discount.
A notable feature of Pinel + is that it will allow you to keep a tax discount of up to 21% if and only if you meet three new conditions regarding ecology and comfort. Know:
· Mandatory double exposure at T3 and more.
· Minimum living space according to the type of housing.
· Mandatory appearance for T3 and not only
Thanks to the Censi-Bouvard system, there are fewer restrictions and up to 11% tax reduction
Extended until December 31, 2022, the Censi-Bouvard – compared to the Pinel device – has everything to please. And for good reason, the latter offers a significant tax reduction without any restrictions on geographic location, rent or even resource constraints of tenants! In practice, the Censi-Bouvard system is intended for people who want to invest in a furnished apartment located in a serviced building (student house or residence for the elderly). The property must be new, entrusted to the residence manager and rented under LMNP (Non-Professional Furnished Renter) status for at least nine years. If this status limits your rental income to €23,000 per year and 50% of the total family income, it allows you to benefit from a tax reduction equivalent to 11% of the price without VAT of the property purchased (2). Example: For a property worth €300,000 (the maximum annual investment property amount), your tax reduction would be €33,000 over nine years. This will allow you to benefit from an annual deduction of €3,666 on your taxes.
Bonuses : in 2022, Censi-Bouvard still allows you to enjoy the benefits of LMNP status. translation? This allows you to claim back 20% of the VAT on the purchase price of your new furnished property. An additional tax benefit which, added to the 11% tax rebate mentioned above, allows you to save 31% on the price of your investment! And the icing on the cake: residences managed by Réside Études – a benchmark company for over 30 years – can achieve returns of up to 3.90% pre/tax (1).
- The rate is offered on July 1, 2022 for the amount of real estate without investment VAT, according to the commercial lease proposed by the manager and according to the available stocks.
- Legal information: within the provisions of the current Finance Act (Cency-Bouvard Act). This tax saving applies to any new purchase of a student or senior citizen serviced residence managed by a professional operator and eligible for this status. Tax savings equivalent to 11% of the VAT-exclusive amount of your investment, limited to €300,000.
AGAINSTContent created in partnership with Réside Études. No member of the BFMTV editorial team was involved in the writing of this content.