Before thinking about finding tax reduction strategies , the first step is to make sure you are paying a fair tax! We have selected for you 5 reflexes to adopt to optimize the amount of your taxes, in relation to your situation. All this without any investment required!
1. Income tax and withholding tax: optimize your rate
This did not escape you: now the tax is deducted from the salary directly. This is the withholding tax. Rather than paying your taxes every year with a schedule over a few months, the practice is now the monthly levy. Income tax is therefore directly deducted… from your income. It is a sum net of taxes that you receive every month. It is a response from the Government to a problem that many French people encountered: the surprise of the amount of taxes to be paid. This allows you to manage your tax budget in a more anticipated way. However, it is possible that you still have taxes to pay, even with the operation of the withholding tax. For example:
2. Declare your deductions and tax credits
Once you’ve made sure you’re paying the right tax, you can take a look at your annual expenses. In fact, certain categories of expenses entitle you to a tax credit . In other words, these credits apply to the amount of your taxes, with the aim of reducing it . If the amount of your tax credits is greater than that of your taxes, then you will receive a refund from the Direction Générale des Finances Publiques.
3.Take advantage of your family situation to reduce your taxes
You can’t change your marital status, but you can improve how you report it. The goal is to ensure that you declare everything concerning your family situation. Because tax cuts are key!
4.Rent your property bare rental
Concept: When you want to rent out a property, you have two options: either rent it furnished or empty. Bare rental is therefore the second option. It is a question of renting an accommodation which contains only the essential elements for one’s home, namely equipped water points. This corresponds to a shower or bath, a kitchen area with sink (separate from the bathroom) and a toilet.
Operation: This tax allowance will be automatically applied to your taxes, after you have declared your gross income in box 4BE of your tax return (form 2042 ). It was set up to cover your annual costs as a landlord, which is generally estimated at 30% of rental income.
5. The land deficit: declare your tax-deductible expenses
Concept: Owners who submit their property to bare rental can benefit from a mechanism called land deficit . The condition is to collect less revenue than the charges they have spent as an owner, and to adhere to the actual regime.
Note that the work mentioned above must be intended to repair or improve the property to be considered a deductible expense. If you carry out other types of work, you will need to find out if the amount of your work can be considered a deductible expense.
6. The dismemberment of property: reduce the taxation of your real estate assets
How to reduce your taxes thanks to financial investments?
It is possible to reduce your taxes through financial investments . Tax Expert draws up a list and explains everything to you. No more excuses not to enjoy it!
1. Société Civile de Placement Immobilier (SCPI): investment accessible to all
Concept: Because becoming the owner of a property can be restrictive and expensive for some, there is an alternative. You can become the owner of part of the building(s) only , while receiving property income. The SCPI (Société Civile de Placement Immobilier), also called “ Pierre papier ”, is a structure
2. Solutions to support French SMEs: FCPI (Innovation Mutual Investment Fund), FIP (Local Investment Fund) and SOFICA (Société pour le Financement
Concept: Mutual Funds for Investment in Innovation ( FCPI ) and Local Investment Funds ( FIP ) are financial investments aimed at the development of companies that want to be respectively innovative in one case and local in the ‘other. For these two systems, companies must be VSE (Very Small Enterprises) or SME (Small and Medium Enterprises).
Another tax advantage of these devices is the exemption from income tax on any gains. However, FCPIs and FIPs are risky financial products. It is therefore necessary to be well informed before making an investment, or to call on an expert to be redirected wisely.
3. Retirement Savings Plan (PER): the preferred financial investment of the French
Concept: The new retirement savings plan (PER) was set up on October 1, 2019. It now replaces the other retirement savings products, whether individual or corporate. Such as PERP , Madelin contract , PERCO or article 83 . Like the latter, the PER is reserved for the preparation of your retirement savings .
4. Life insurance: the long-term investment par excellence
Concept: Life insurance is a savings contract that allows you to build up capital made up of sums invested and capital gains generated ( interest ).
Benefits: By subscribing to a life insurance policy , you can enjoy the following benefits. First of all, the freedom to choose the amount of the payments , the duration of the contract and the beneficiaries of the capital built up. Thus, you will be able to carry out a transfer of capital , without inheritance tax . This investment envelope will also allow you to make regular withdrawals or life annuities , so taxation will be reduced according to your age.