Real estate credit: Deduct from its taxes the interests of the mortgage?

2017 was the last year you could qualify for a tax credit for the acquisition or construction of a principal residence. You can still continue to benefit from this type of advantage, but only as part of a rental investment.

Tax credit schemes

Tax credit schemes

In 2018, the deduction of mortgage interest for the tax return ends. It was linked to loans contracted between May 2007 and September 2011, when the zero-rate or PTZ loan took over. Ditto for new housing and labeled BBC (low energy consumption) which could deduct 40% of interest over a period of seven years. Henceforth, to obtain advantageous tax cuts, one must turn to rental investment in old and new.

Tax benefits of rental investment

Tax benefits of rental investment

If you decide to buy a property to rent, you can deduct from your property income the amount of interest on the mortgage loan you have subscribed for this purpose. In addition, you can also subtract the costs incurred for the mortgage: administrative fees, setting up a deposit, registration in the mortgage register, commissions and banking agios and even the borrower insurance. Think about it during the financial setup of your project!

Note that sometimes the property is difficult to rent and you end up with an excess of charges. In this case, you can also deduct this excess from your overall income, up to a limit of 10,700 euros, but not the interest on the loan (according to the website impots-gouv.fr). Be careful, this device works as long as your property is rented. If you stop renting, loan interest ceases to be deductible.

Also know that you can get tax cuts by making a rental investment through specific tax exemption devices. There are three main ones. The Demorex law concerns the purchase and renovation of an old apartment on a remarkable site as a historic center. The Banua law relates to furnished rentals and the Pinel law (renewed in 2018), the construction and acquisition of a new housing dedicated to rental in areas of tension – large cities.

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