Investment in service residences is favored by the Censi-Bouvard amendment. In fact, this scheme adopted in 2009 offers numerous tax advantages. Tax reduction
For an investment in residential services under Censi-Bouvard, the tax reduction can reach 33,000 euros spread over 9 years. This represents a benefit of 3,666 euros per year. This is made possible by a tax reduction rate of 11%. Indeed, the maximum ceiling for the tax relief covers a maximum amount of 300,000€ excluding VAT.
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This advantage is explained by an incentive policy implemented by the government to increase the construction of new facilities in this area.
Deferred tax reduction
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The tax relief is subject to deferral. This will be possible when the tax reduction exceeds the tax to be paid. In this case, the excess tax will be carried forward to the following years.
Cumulative tax reductions
If the owner of a Censi-Bouvard property holds other assets under different arrangements, they will then have the option to combine the Censi-Bouvard tax relief with other tax schemes.
VAT recovery
VAT will be recoverable under certain conditions:
- The acquired residence service must offer at least 3 services (catering, cleaning, reception…).
- The rents collected by the residence operator must be subject to VAT at the rate of 5.5% (reduced rate).
- The buyer must choose the LMNP Censi-Bouvard scheme and declare their rental income as industrial and commercial profits.
- After delivery, the property will then be managed by a service residence. Generally, within 3 to 6 months following the start of the establishment’s activity, the VAT will thus be recoverable. Please note that VAT recovery will only apply to new products.
1. Collecting rents
Since the property is managed by a manager, in exchange for the rents, they will be returned to the owner. This will be done quarterly or monthly depending on the establishment’s manager. These rents will then allow the investor to honor their loan or provide additional income.
Let’s not forget that, in certain service sectors, demand is increasing in the face of still too low supply.
This is particularly the case for EHPAD residences. It will then be possible to obtain regular rents and gain value at the time of resale of the property.
The payment of rent will be ensured by signing a commercial lease for a period of 11 years and 9 months. This contract will also ensure the management of the property by the operator, which eliminates a significant constraint for an investor.
2. Making different investments
Thanks to this amendment, it will be possible to make several acquisitions and accumulate tax reductions. The only privilege is that the tax relief will be limited to 300,000€ of properties held under Censi-Bouvard.
3. Investing in shares
This means you can buy a property in a multi-person residence. In this case, under Censi-Bouvard, each person will benefit from the tax relief. On the other hand, it will be carried out within the limits of personal contribution.
4. Building wealth
This is an excellent vehicle to start building wealth or to diversify it. Through this system, the investor will consolidate and support their assets. It is a stable investment that can also be made in cash or on credit.
Moreover, real estate located in Censi-Bouvard is very popular, as it has high rental potential.
5. Preparing for retirement
An investment in Censi-Bouvard guarantees a permanent annuity. It is a good way to supplement your income with rental income.
6. Protect your loved ones.
You can pass on your property in Censi-Bouvard. Additionally, if the investor goes through a loan to finance the acquisition, they will have the option to take out death or disability insurance. The latter will take over, in the event of a serious accident, to allow for the repayment of monthly installments.
Heirs will have no debt to repay and will have a property financed by rents.
Tag: censi bouvard amendment