When it comes to investing in property, one question often comes up: should you opt for old or new? While both options have their merits, new-build property offers particularly attractive tax benefits, which many investors still underestimate.
Among the tax incentives, the CIOP is undoubtedly the most advantageous tax incentive for new-build property. It allows investors who rent their property for 6 years to benefit from a tax credit of 35% of the value of the investment (capped at €3,295 excl. tax per m2). This scheme only applies to the purchase of a new home in the French Overseas Territories, and is subject to certain conditions.
Unlike older homes, where notary fees are around 7-8%, new-build properties benefit from reduced fees of between 2-3%. An immediate gain on purchase.
For example, on a property costing €250,000, this represents a saving of €10,000 to €15,000 compared with the old property.
Many local authorities offer partial or total exemption from property tax for 2 years for new homes. This can significantly reduce costs in the first few years, especially if the property is to be rented out.
If you invest in a new furnished property under the LMNP (Loueur en Meublé Non Professionnel) scheme, you can deduct all rental-related expenses and depreciate the value of the property. As a result, your rental income pays little or no tax for several years.
This is one of the most powerful schemes for generating tax-free cash flow, especially when combined with the low charges of a new property.
Investing in new-build property doesn't just mean choosing a recent, energy-efficient property. It also means taking advantage of an ultra-favorable tax environment, especially if you plan your strategy carefully.
