Tax optimization: comparing Malraux vs. Girardin | Neofa

Several investment options offer the benefit of reduced income tax, a method known as investment tax exemption. This approach involves creating a finance charge deductible from taxable income. Investments in real estate offer such possibilities. This orientation is the result of a legislative decision aimed at supporting rental investments, overseas projects or renovation of old buildings.

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Here are two real estate investment strategies that offer the opportunity to benefit from tax advantages:

1. The Girardin Regime: real estate tax exemptions to stimulate the development of overseas territories

The Girardin system is designed to promote overseas investment. It is divided into the social Girardin for the financing of social housing in the overseas departments and territories, the industrial Girardin for overseas industrial projects and the agricultural Girardin for investments in the agricultural sector in the French overseas territories.

It is important to note that this operation is “one-off” in nature, i.e. it involves a one-time investment with no expectation of future profits. The main attraction of this investment is the tax benefit. The tax reduction achieved is actually greater than the amount invested. At a contribution rate of around 90%, this means that an investment of €90 can result in a tax reduction of €100 or a tax benefit of 11.11%.

However, this commitment must be maintained for more than 5 years. In addition, if the transaction shows irregularities, the tax benefit could be challenged. It is therefore essential to choose projects with the best guarantees.

Investing in Girardin is quite complex and the choice of project is decisive. Therefore, it may be wise to turn to a wealth management advisor for appropriate support.

Also note that the Girardin system benefits from a high tax shelter ceiling that can reach €18,000.

2. Malraux law: tax exemption measures for the preservation of ancient architectural heritage

The Malraux law aims to promote the restoration of historic buildings. It applies to expenditure incurred on buildings classified as historic monuments, recognized by the Heritage Foundation or located in conservation zones of architectural, urban and landscape heritage.

On the same topic:
Estate Tax Exemption: An Overview of the Different Laws in 2023

This law offers an income tax reduction of 22% of the costs incurred for works in the areas of architectural, urban and landscape heritage protection. This reduction can reach up to 30% for projects located within the Preservation and Development Plan (PSMV) or for buildings located in old degraded sectors defined by the Law of March 25, 2009 or in the neighborhood of the New National Urban Renewal Program (NPNRU). The maximum amount of this tax reduction is limited to 30,000 euros for a period of 4 years.

In return, the owners must agree to rent the property unfurnished for a minimum of 9 years. Since 2013, this tax system has been excluded from the overall capping of tax loopholes. »

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