Solutions for housing your student child

Rent or lend your apartment

If you're lucky enough to own an apartment in the city where your child has chosen to study, there's no reason why you can't lend it to him or her. This is a free loan. It's part of the maintenance obligation parents have towards their children. The problem is that, in this case, you won't be able to deduct the expenses relating to the building from your rental income. It is also possible to rent it out to him/her. This must be done in writing, by drawing up a lease and setting a rent in line with local market prices. However, the tax authorities allow a 10% allowance. This allows you to deduct rental charges from your tax return. The disadvantage is that your child will not be entitled to housing benefit. The advantage is that by renting to your offspring, the rental risk is lower, if not non-existent. This means you don't have to take out insurance against unpaid rent.
You can also rent to your child while benefiting from the PINEL scheme. Indeed, the novelty compared with the DUFLOT law is that you can rent to your family. Under the PINEL law, you benefit from tax advantages that depend on the length of the rental period:
- 21% of the investment price for a 12-year rental period
- 18% of the investment price for a 9-year rental period
- 12% of the investment price for a 6-year rental period

This can represent an interesting opportunity to invest while housing your student child, provided you are in one of the zones defined by the government.

Investing for now and for the future

If your child is destined for long-term study, buying a home may be more profitable than renting. An analysis of purchase prices and rents in different cities shows that, in some cases, the cost of renting can be around half that of buying the same property. What's more, there are a number of attractive tax incentives available, so why not take advantage of them?
Under the CENSI-BOUVARD tax scheme, you invest in new-build or future completion properties. This applies to furnished student residences with services. You can benefit from a tax reduction of 11% of the property's cost price (excluding tax), up to a maximum of 300,000 euros per investment (subject to certain conditions). This tax reduction is spread over 9 years on a straight-line basis. Please note! You only have until December 31, 2018 to take advantage of this tax reduction scheme. However, as the student residence depends on a manager, there's no guarantee that your child will benefit from the property, unless you negotiate with him or her.

Donations: an alternative
Donating one of your properties to your child for housing can be a good solution. You give him/her the usufruct (enjoyment) of an apartment, and retain bare ownership. This gift of usufruct can also be temporary. Ask your notary for more information.

Stéphanie Swiklinski