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All you need to know about tax exemption in 2019

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Barnes Bordeaux reveals the essentials of tax exemption in 2019

Are you considering buying a new or old property in Bordeaux? Do you want to get into rental investment or carry out renovation work? in your house or apartment located in the Bordeaux metropolis? Note that there are several devices intended to energize several sectors (in particular the real estate market) and which allow you to benefit from a tax reduction. Barnes Bordeaux explains everything.

What is meant by tax exemption?

Tax exemption, tax reduction, tax advantages… All these terms are close and bring back to the same idea: a reduction in tax charges and, consequently, more or less significant savings for the beneficiary. In summary, tax exemption refers to the set of measures and devices provided for by law in order to reduce the amount of income tax. These tax advantages are created, modified or eliminated according to government policies, the economic context and the geopolitical climate. Their main objective is to encourage investment and their allocation is subject to several criteria, most often geographic or social.

Tax exemption in real estate

In real estate, the Barnes Bordeaux business sector, tax exemption aims to give potential investors a strong argument to buy new or old real estate. It also encourages them to carry out work in their accommodation to prevent it from becoming unhealthy, or to fight against climate change by installing energy-efficient devices such as a high-performance boiler or solar panels (environmental issue) . In recent years, several texts have been adopted to this effect: Censi-Bouvard law, Duflot law, Cosse law and, more recently, Pinel law and Denormandie law.

Pinel Law

Created in 2015, the Pinel law came to replace the Duflot law by making some modifications. It offers an income tax reduction to owners who rent out their property. The longer the rental period, the more attractive the tax exemption. It represents 12% of the purchase price of the property for a rental commitment of 6 years, 21% for 12 years of rental. The Pinel system concerns the new and the old. It is granted only if the three main eligibility conditions are met: if the accommodation is located in an eligible geographic area (A, A Bis, B1 and some in area B2), if the tenant's resources and the amount of the rent do not do not exceed the fixed ceilings.

The Popular Retirement Savings Plan (PERP)

The PERP offers individuals the best possible preparation for their retirement while reducing their income tax. Unlike conventional life insurance, PERP results in tax exemption corresponding to the marginal tax bracket. Each year, payments made on retirement savings are tax deductible, with a ceiling set at 10% of net income for the previous year.

Overseas tax benefits

Overseas France is unique in more ways than one, mainly due to its isolation. To combat inequality and support the economy of these territories, the government has set up tax exemption systems for overseas investments. This is for example the case of the Pinel law. The Pinel DOM-TOM system gives the right to a tax reduction of up to 32% of the total investment to individuals who buy a new property and rent it in France overseas, while the tax reduction is capped at 21% in mainland France.

Girardin law

The Girardin law is another essential device for tax exemption overseas. Created in 2003, it entitles taxpayers who invest in overseas France, in real estate (Girardin Habitation Law) or industrial equipment (Girardin Industrial Law), to a lower income tax. The tax reduction for investors ranges from 25 to 50%, and can be as high as 64% in exceptional cases.

Renovation work and tax benefits

Tax relief does not necessarily involve the acquisition of new or old housing. Sometimes it is enough to carry out renovations that involve a reduction in energy consumption to qualify for tax benefits. The Pinel law provides for this scenario. Tax exemption can be granted in the case of rehabilitation works if these works allow the accommodation to obtain the "Low Consumption Building" or "High energy performance renovation" label.

Donations, another gateway to tax exemption 

Generosity can be a great tax advantage, especially if it takes the form of donations to an association, foundation or other body of general interest or public utility. The t

ax reduction generally ranges from 66% to 75% of the amounts paid, with a taxable income limit set at 20%. 

Works of art and tax exemption 

All taxpayers who have a work of art in their possession can claim tax exemption. The tax reduction in the artistic field does not only concern paintings. It also applies to sculptures, jewelry, antiques, high-value furniture, cars and other collectibles. The tax allowance depends on several criteria. Tax experts believe that acquiring a work of art becomes profitable if it is kept for at least 5 years. 

Historic monuments 

Safeguarding heritage is also a noble cause, a cause supported by tax exemption. Tax advantages are offered in the case of restoration or conservation works of monuments or elements of buildings classified as historic monuments. It can be the restoration of a facade, a tapestry or a sculpture. 

Do you want to know more about tax exemption in Bordeaux? Contact Barnes Bordeaux and benefit from the advice of a real estate expert in Bordeaux to optimize the profitability of your investment!