Like a house, wealth, especially real estate, is built up over time. Whether you're 20, 30 or 50, the way you approach the subject is not the same, because objectives and needs change over time.
From age 30 to 40
Becoming a homeowner
You've got it! You've finally landed a stable job and can look forward to a brighter future. You've been in a relationship for a few years now, and your desire to become a homeowner is growing stronger and stronger. You don't want to pay rent at a loss every month. But don't forget that becoming a homeowner doesn't happen overnight, and that instead of rent, you'll have to make monthly repayments on a mortgage. That's why it's vital to weigh up the pros and cons of renting versus buying, and to calculate your budget. Given current interest rates, now is a good time to borrow.
With the Prêt à taux zéro (PTZ), it's even more attractive. But if you want to apply for a PTZ, make sure you meet all the necessary conditions, and pay particular attention to where you plan to buy. While the PTZ has played a major role in boosting new housing construction in France, the plan presented by the government involves reconfiguring eligible zones. In the most densely populated zones (A, A bis and B1), the PTZ will be reserved for the purchase of new homes. In the other zones (B1 and C), the PTZ will only be available for existing properties. Other conditions (income ceiling, amount, etc.) will not be affected by this reform.
From 40 to 60 years old
I invest
This is the ideal age to build on your small savings and consider other projects. Now that you've got your main residence and a little money to spare (which you'd like to invest without too much risk), why not turn to rental investment, while defiscalising the rental income?
That's exactly what Pinel offers. It offers a tax reduction of 21% of the investment price for 12 years of rental, 18% of the investment price for 9 years, or 12% of the investment price for 6 years. Renewed for a further four years, the Pinel scheme has undergone a number of changes. It has been refocused on the so-called "tense" zones, and is now only applicable in zones A, Abis and B1. The conditions for benefiting from the tax reduction remain unchanged (rent and tenant income ceilings, maximum investment of 300,000 euros/year up to a ceiling of 5,500 euros/m2...).
But as you approach 60, it's also time to start thinking about retirement and finding ways to supplement your income. While investing in the Pinel scheme is one solution, there are others, such as SCPIs, forestry or wine-growing landholdings, or parking lots.
After age 65
Anticipating my inheritance
Retired, you own your main residence, a rental apartment and a second home. You're starting to think about passing on your estate to your spouse and children. To avoid conflicts, especially if you have several children, one solution is to set up a société civile immobilière (SCI).
This ensures the preservation of your real estate assets, and makes it easier to share them out, since it's easier to "distribute" company shares than real estate. It also offers tax advantages.
In fact, when you donate a property to a relative, you have to pay gift tax. Disadvantage: this calculation does not take into account the liabilities associated with the property. By creating an SCI and incorporating one or more buildings, the donor transfers shares that take account of the liabilities. This reduces the amount of gift tax payable. This technique is also used when parents wish to make a gift to their children, while retaining control of their real estate holdings.
It involves making a gift of shares in an SCI (real estate investment company) that includes a building, while retaining a right of inspection and a "say" in the matter. All you need to do is keep enough shares to exercise control over the property in the future. As soon as the articles of association are drawn up, it should be made clear that the parents become co-managers of the SCI, giving them the broadest powers to continue managing the family estate.
Before getting started
- Define what you expect from the investment: availability, return, etc.
- Make a diagnosis of your situation, taking into account not only the financial aspect, but also your family and tax situation.
- Identify your investor profile (risky or secure) and determine your investment strategy (short, medium or long term).
- Generally speaking, to prepare for your retirement or make a real estate investment, consult your notary, who will be able to analyze your family and asset situation and advise you in your best interests.
Marie-Christine Ménoire