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discover the 10 tips to effectively reduce your taxes

Every year, it’s the stress when you receive your tax slip. But, you should know that there are perfectly legal solutions to reduce your tax bill. Indeed, in terms of tax exemption, you can invest your money in real estate, investment funds or even in the field of wood. Discover in this article the 10 devices to lower your taxes.

Tax exemption in 2022, child’s play with these 10 tips!

1- Tax exemption in real estate with the Pinel law

You have certainly already heard of the Pinel law. This is a tax exemption solution to allow you to invest in rental property and thus have less tax. Indeed, the reduction is 12% but on the condition of renting your property for a period of 6 years. The more you commit to the long term, the greater the tax reduction will be: 18% for 9 years and 21% for 12 years.

On the other hand, to take advantage of the Pinel law, you must fit into the boxes and respect certain rules. First of all, an investment ceiling of 300,000 euros and a rent ceiling which varies according to the property concerned and the region. All dwellings are concerned (old or new), but not all regions of France are eligible for the Pinel scheme. In the case of an old property, some renovation work may be necessary.

2- Reduce your taxes thanks to the safeguarded sectors and the Malraux law

Still in the real estate sector, you may be interested in the Malraux law. But, this law concerns only the owners of buildings which are located in safeguarded places or degraded zones. As the Malraux device aims to preserve the French architectural heritage, it helps you to carry out work to rehabilitate a protected property. Thus, in terms of tax exemption, it is a good idea, because you are entitled to tax reductions. These amount to 30% of expenditure for works in a protected district and 22% for buildings located in an architectural, urban and landscape heritage protection zone. Just like the Pinel law, this device is only valid if you rent the property for a minimum of 9 years.

3- Investing in a historical monument

To take advantage of an interesting tax exemption, you can also invest in a French historical monument. For the property to be qualified as a historic monument, it must have a specific approval which is given by the tax services or have the “heritage foundation” label. And the good news is that there are many in France. Thus, you will be able to charge the interest on the loan to your overall income. The amount of work must not respect any ceiling. The conditions are to rent and keep the property for a period of 15 years.

4- LMNP: buy a service residence for successful tax exemption

In terms of tax exemption, you can also turn to the purchase of a service residence. It can take different forms: student residence, tourism or even an EHPAD. This is a non-professional furnished rental that will lower your taxes. Indeed, you will have a tax exemption of 11% of the total amount invested, but the accommodation must be new. Thus, you will benefit from the Censi-Bouvard law and like other means of real estate tax exemption, you must rent for a minimum of 9 years. Like the Pinel law, the investment is capped at 300,000 euros.

5- Industrial investment, a good solution?

This is the Girardin law of 2018 and it concerns investments in the industrial sector, but also in social housing in the DOM-TOMs. You buy an industrial property or for a social purpose. The tax exemption is very interesting, because it can go up to 50% of the amount invested. In addition, the rental is for a minimum of 5 years of rental.

Investing in real estate therefore allows you to reduce your taxes, but also to create a heritage. But other solutions exist that we will explain to you in the next five points.

6- Think about the timber industry to lower your taxes

We do not immediately think of investing in wood and yet this can allow you to reduce tax. Indeed, if you invest in the sector or in a forestry group, it is a relevant way to lower your income taxes. Indeed, a reduction of around 18% if you buy land. The rate rises to 25% if you are part of a producer organization.

7- The popular savings plan is an option not to be put aside

Your banker has probably told you about the PEP, the popular savings plan. This is a good way to build capital and therefore benefit from tax exemption. The idea is to put money aside for the long term. After a certain time, the sum contained in the PEP will be paid back in the form of a life annuity. The payment ceiling is limited to 92,000 euros, not including capitalized interest. In addition, the tax reduction varies according to your bracket.

Life annuities are deductible from 10% of your professional salaries or, if the annual social security ceiling is above the amount of your salaries, from 10% of this ceiling.

8- Help SMEs

If you are single and you invest in an SME, then you will act in a favorable way in terms of tax exemption. On the other hand, your investment must not exceed the sum of 9,000 euros. For couples, the ceiling is set at 18,000 euros. In both cases, the reduction corresponds to approximately 25% of your payments.

9- Tax exemption with investment and investment funds

Another solution is to pay money into a mutual investment fund in the field of innovation or into a local investment fund. Once again, there is a ceiling which is limited to 12,000 euros for a single person and 24,000 euros for a couple. The tax exemption will be approximately 25%. If you invest in a local investment fund in Corsica, for example, the tax deduction can go above 25% depending on the case.

10- Reduce your taxes by investing in cinema

Whether you are a fan of cinema or not, you can make your contribution by financing one of the companies in the cinematographic and audiovisual industry (or SOFICA). This gives you the opportunity to reduce your taxes provided that SOFICA has invested 10% of their assets in a production company. Thus, you can consider a reduction of up to 48% of your taxes.

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