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Rental investment is a political orientation that has given rise to many advantageous tax schemes by successive governments. The main objective is to boost rental investment to address the problems of housing shortages. Today there are motivating tax benefits for all those who wish to place in the rental.

Rental investment: Tax benefits Duflot-Pinel law

The Duflot law has undergone some rather positive changes for homeowners who wish to rent. This law became the Duflot-Pinel tax system as of September 1, 2014, as part of the 2015 Budget Act.

The conditions to benefit from the tax advantages concern the type of housing, the duration of commitment in the rental, the geographical situation of the property... The dwellings concerned are not only the new housing but also the rehabilitations close to new, the transformations of premises in habitable housing and the VEFA (Sale in the future state of completion).

To benefit from tax benefits, housing must meet certain conditions:

  • to be purchased between September 1, 2014 and December 31, 2016,
  • to be rented as a principal residence,
  • benefit from an environmental label,
  • to be in one of the so-called sensitive geographical zones (Paris 1st and 2nd crowns, large and medium-sized agglomerations...),
  • and not to exceed certain ceilings on the tenant's rent and resources.

Tax benefits are proportional to the lease commitment period. There are three levels of tax reduction rate depending on the lease term: for 6 years the investment tax reduction is 12%, for 9 years it is 18% and for 12 years it reaches 21%. The tax advantage is capped at 300,000 euros and can not be carried over from one year to the next.

Unlike the original law, it is now possible to rent to a member of his family.

Rental investment: tax benefits in furnished

There are two types of furnished rentals that can qualify for tax benefits.

  • The status of LMP (Professional Furnished Rental)

Defined by the General Tax Code, this rental method concerns rental income exceeding 23,000 euros per year. Registration in the Trade and Companies Register as a professional furnished rental property is mandatory as well as certain administrative and accounting procedures. Rents are taxed in the category of industrial and commercial profits (BIC). This status gives the right to many tax benefits such as the deduction of property taxes on the overall income, reduced inheritance tax, the possibility of being exempted from a capital gain on resale under certain conditions, the exemption of the property tax. wealth tax (ISF), recovery of VAT...

  • The status of LMNP (lessor in furnished not professional)

This status is possible when rental income is less than 23,000 euros or if income is less than half of your total income. In addition to certain advantages common to the LMP status (deduction of land charges, exemption from the ISF, flat-rate abatement, etc.), the LMNP status provides access to the benefits of the Censi-Bouvard law if the investment is made in serviced residences. (student, senior, tourism). Under certain conditions, this tax advantage gives the right to a tax reduction of 11% of the invested capital over 9 years.

Video Instruction: 8 Tax Deductions for Real Estate Investors 2018