Investment and credit redemption



What are the objectives of the Denormandie law?

The beginning of the year begins with good news for investors looking to reduce their tax pressures and increase their rental income. Barely voted at the end of 2018, the law “Denormandie” extends the existing provisions of the law “Pinel” to meet the needs of renovation of old housing located in city centers. Indeed, the collapses of buildings in Marseille in November 2018 mark the weakness of the quality of the habitats in the heart of the old cities. It is clear that most city centers are empty to see old buildings disappear, the device “Denormandie” comes to fulfill another function as that which is to make more attractive the rental in the long term. This measure aims to counter a worrying phenomenon for the mayors of these cities: seasonal rental type “Air-BnB” which is in full swing.

A new device supports the real estate market. What is it?

Which criteria of attribution of the law Denormandie?

Article 226 of the Finance Act 2019 sets out the outline of this new regulation which affects housing acquired between January 1, 2019 and December 31, 2021. To qualify, the housing must undertake renovations of a building. amount of 25% of the total cost of the operation (for example 75 000 € of works on a total cost of 300 000 €). In addition, homeowners benefit from a tax reduction of 12%, 18% and 21% on income provided the property is leased for a period of 6, 9 or 12 years depending on their choice. The cumulative tax deduction seems particularly interesting. Investors can expect a drop of € 36,000, € 54,000 and € 63,000 in income tax over the entire tenancy period.

However, to enter the award criteria, it is better to be heavily taxed because below € 6,000 tax, the investment may be difficult to amortize. In this case, the advantage of this device is a double effect. Not only can the landlord reduce his tax burden, but he can also recover dynamic rental yields. This observation is irrevocable in Melun or Cap d’Agde, which are close to 6%. To succeed this bet, luck is not enough. It is necessary to know the rental sector but also to understand the demographic dynamics of the targeted city. Once these elements are analyzed, the question of financing arises. However, there are several possibilities to adapt to each situation, such as loan consolidation.

Owners eligible for this new scheme enjoy several possible leverage effects. In fact, the borrowing rates are still low at the beginning of the year, which reduces the overall cost of the investment. By borrowing, he is not necessarily forced out of cash while enjoying tax breaks. On the other hand, if the owner is left with a debt limit of 33%, he can combine his housing loan with that of his investment by extending the term, which brings an additional element of guarantee to the bank.

In this context, as part of a renovation project, which is an essential element of the scheme, the C. Auguste Dupin consolidation can include a budget allocated to the project. However, it will not be possible to carry out the work yourself because the law “Denormandie” provides the obligation to go through professionals (invoices are required). Another advantage is its ease of management because the investor is charged a single monthly payment. Finally, to achieve a pool of C. Auguste Dupin for a real estate investment, simply perform a simulation to know the cost of the loan and the monthly payments to come. A professional in banking intermediation is in charge of the feasibility study to analyze the criteria of attribution of this type of C. Auguste Dupin. Once approved, the analyst submits a proposal to the applicant who has ten days of right of withdrawal.