Investing in new real estate has many advantages. By buying a new home, you realize savings that you would not achieve by buying in the old one (reduced notary fees, no work to be done, better energy performance…). You also benefit from the leverage effect of credit, and benefit from significant tax advantages. In addition, a new property being more attractive, you build up an asset whose value will be maintained or even appreciated over time.
1. A secure investment
Thanks to insulating materials and thoughtful design, new real estate offers high energy performance. Another advantage, new real estate comes with many guarantees which guarantee peace of mind. In the event of work made necessary by a possible construction fault, the promoter bears all the procedures and the related costs.
Conversely, older real estate most often requires renovation work, whether to bring the home up to date or to improve its energy performance. In addition, an old property may contain defects which, without constituting hidden defects, were not visible at the time of purchase and require work which remains the responsibility of the investor.
2. Invest on credit
Unlike financial investment, it is actually very possible to invest in real estate on credit. The mortgage allows you to borrow the amount invested in the property, the rent covering all or part of the monthly repayment installments. Once the mortgage is fully repaid, you have real estate assets by having made a limited saving effort.
By borrowing all or part of the price of the property, you are also making a larger acquisition than what you could have afforded by drawing on your personal savings alone. This is called the credit leverage effect.
3. Reduce your taxes
Several tax exemption systems encourage investment in new real estate:
- The Pinel system allows you to benefit from a tax deduction of 12%, 18% or 21% of the price of the accommodation, for a minimum rental period of 6, 9 or 12 years. The Pinel law relates to bare rented accommodation, in compliance with certain conditions (geographical area of the property, tenant’s resources, capped rent).
- The Censi-Bouvard system allows a tax reduction equivalent to 11% of the purchase price excluding tax (up to 300,000 euros) and to recover real estate VAT (20%). In return, you agree to rent your property for a period of 9 years. Le Censi-Bouvard is reserved for rented accommodation furnished in service residences, for non-professional furnished rental companies (LMNP).
In addition, a purchase in new real estate allows you to benefit from reduced notary fees: from 2 to 3% of the price of new housing, against 6 to 7% in the old one. In order to stimulate the construction of new housing, certain local authorities also grant an exemption relating to part of the property tax during the first 2 years.
4. Build up a sustainable heritage
Real estate is a safe investment: its value tends to increase over the long term. New housing is all the more likely to increase in value as it does not require upgrading work, particularly in terms of energy renovation. Various certifications attest to this high level of requirement in new real estate. This particularly promotes resale and allows to consider a capital gain.
In terms of heritage, real estate is passed on to its heirs and descendants. Owning property through a civil investment company (SCI) even allows you to benefit from advantageous conditions for the transfer.
5. Benefit from a rental annuity
Once the mortgage is fully repaid, the investor receives gross rents, on which they benefit from a reduction of 30% (50% in LMNP with the BIC regime). This limits the taxation on property income and strengthens the interest of this rental income.