1. Secure Investments
Investing in new real estate comes with numerous advantages. By purchasing a new property, you can make savings that you wouldn’t with an older property (reduced notary fees, no immediate need for renovations, better energy performance, etc.). Additionally, you benefit from the leverage effect of credit and enjoy significant tax advantages through your real estate investment. Furthermore, a new property is more attractive, allowing you to build a valuable asset that will maintain or even appreciate in value over time.
2. Investing with Credit
Unlike financial investments, it is possible to invest in real estate with credit. A mortgage allows you to borrow the amount invested in the property, with the rental income covering all or part of the monthly repayments. Once the mortgage is fully paid off, you have an immovable asset while making limited efforts to save.
By borrowing all or part of the property’s price, you can make a larger acquisition than what you would have been able to afford with your personal savings alone. This is known as the credit leverage effect.
3. Reducing Taxes
Several tax benefits encourage investment in new real estate:
- The Pinel system allows for a tax deduction of 10.5%, 15%, or 17.5% of the property price in 2023, for a minimum rental period of 6, 9, or 12 years. The Pinel law applies to unfurnished rental properties under certain conditions (geographical zoning, tenant income, capped rent).
- The LMNP status (non-professional furnished lessor) allows for a 50% deduction on rental income generated from furnished rentals (micro-BIC regime) or the deduction of actual expenses (actual regime). Investing in LMNP in a new service residence also allows you to recover 20% VAT on the purchase price of the furnished property.
Moreover, purchasing new real estate reduces notary fees to 2-3% of the property price, compared to 7-8% for older properties. In order to stimulate the construction of new housing, certain local authorities also grant exemptions on part of the property tax for the first two years. The cumulative effect of these tax advantages and reduced notary fees boosts the profitability of your rental investment.
4. Building a Lasting Asset
Real estate is a safe investment as its value tends to increase in the long term. A new property is even more likely to appreciate as it does not require any upgrading work, especially in terms of energy renovation. Various certifications attest to the high standard of new real estate, enhancing resale opportunities and the potential for capital gains.
From a wealth management perspective, real estate can be passed down to heirs and descendants. Owning properties through a real estate company (SCI) even offers advantageous conditions for inheritance.
5. Enjoying Rental Income
Once the mortgage is fully paid off, the investor receives gross rental income, with a 30% deduction (50% for LMNP under the BIC regime). This reduces the tax burden on rental income and strengthens the appeal of this rental income. The profitability of your investment allows you to supplement your income while managing your taxes effectively.
