A real estate project? What effects on our taxes? They vary according to the nature of the purchase (main residence, secondary or rental investment), and the time of resale … Focus on essential measures.
Tax deductions or credits are not a thing of the past!
Even though the loan interest tax credit no longer exists since 2011, other measures are still in place. However, you have to choose the right situation for your profile and your project.
There is a notable difference between tax credits and tax reductions.
By definition :
- The tax reduction is an amount subtracted from the amount of tax
- The tax credit is also an amount subtracted from the amount of tax. But unlike the reduction, it can be reimbursed to you, in whole or in part, in two cases:
- If the amount exceeds your tax
- If you are not taxable
The energy renovation tax credit
To take advantage of this, you must do work that complies with the sustainable development charter that the government put in place definitively in September 2014.
To do this, they must concern at least two thermal improvements within the housing (purchase of pump heat, heating regulation, insulation…). This credit is limited to USD 8,000 for a single person or USD 16,000 for a couple declaring their income jointly.
Its installation is simple. When reporting taxes, specify the amount of your work in the “Reductions and Tax Credits” category.
A sub-section is called “Expenditure in favor of the environmental quality of the main house” and allows you to declare precisely the work you have carried out (energy saving, thermal insulation, energy production equipment using a source of energy). ‘renewable energy…).
However, it is important to keep the invoices for the works or materials purchased, they may be requested from you in the event of an inspection.
Tax reduction and tax exemption laws *
These measures allow you to withdraw from the amount of your taxes the deductible amount allocated by the State. They can be done in special cases
The most recent: the PINEL law. To benefit from it, you must buy a new property to rent it out and comply with certain constraints (notably the city of residence).
The previous law, the Duflot law, provided for an 18% tax reduction in the purchase price of new housing. Now, with the Pinel law, there are three possibilities:
In principle, the longer your commitment to rent your property, the greater the tax reduction will be. In practice, the owner must initially commit for a minimum of 6 years and extend his engagement for the two periods of three years.
If the main conditions remain unchanged (tenants’ resources, rent ceiling, the maximum price per square meter) the Pinel law, unlike the Duflot law, authorizes rental to ascendants and descendants, without compromising the tax advantage.
Other laws are favorable to individuals so that they constitute an additional and diversified heritage.
For example, the law Bouvard (Renter in Furnished Not Professional). It applies to the purchase (new or in transit) of tourist, business, student or EHPAD residences. These goods are furnished. This law makes it possible both to recover part of the price for tax exemption but also part of the price linked to VAT.
There are also more specific laws such as Malraux law, Debian…
With or without the benefit of a law, a rental investment allows you to reduce your taxes by creating a property deficit through renovation work and the charges created by the interest generated by a loan.
Do we still benefit from tax advantages in the event of renegotiation?
The current trend is lower rates, we may want to take advantage of them without losing the tax benefits.
If the renegotiation with your bank, or repurchase by another banking organization, does not call into question the tax advantage linked to the law of your investment, it is necessary to take into consideration the fall of the rate and therefore of the generated interests.
Because by paying less interest, you risk being more taxed on your rental income. This risks encumbering part of the profit from the renegotiation or the redemption of your credit.
* Current tax laws and benefits do not take precedence over future finance laws.