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Real estate investment has boomed in recent years and yet it seems that 2019 is not a favorable year for real estate investment. It is more common to hear that you have to invest, here we break codes and we tell you why you should not invest in real estate.
Falling new property prices
The desire to build is on the rise in relation to the demand for buying new goods, so there is a disparity between supply and demand. In the ministry, the price of real estate is up 3%, for LPI, it is rather up 3.5%.
Listings for sale fell 12.8%, while sales fell 7.8%. A decrease due to the tax reduction system put in place with the Pinel law which only applies to 3 well-defined geographic areas.
It is therefore not only the supply which decreases but also the demand, which will imply a smoothing of the prices to this demand.
A probable rise in bank lending rates
The rate will follow the evolution of the rise in the price of silver at the level of the European Central Bank. We must still look on the positive side, this rate hike will be beneficial for sellers of old homes and will gradually lower their price.
On the brink of the economic crisis
Large corporations have benefited from the massive injection of money from global central banks. These large companies have seen their stock prices soar, but their profits are not as large as they wanted.
And small businesses have not been able to benefit from this injection. If there is an economic crisis, then the price of real estate will fall.
Rental income, with a tax system that does not help them
It’s nice to be able to rent a property, it makes an entry of money, but you should know that the rents collected are subject to double taxation.
Renters are initially subject to a social contribution of 17.2% after deduction if this is under the microfoncier regime. Then, a progressive scale on income tax is applied, following the possible abatement.
If you want to invest in real estate, expect a drop of around 47.2%, if you find yourself in the marginal tax rate (TMI) of 30%. It is possible to benefit from a reduction of 50% in the case of furnished rental.
Unlimited property tax
The abolition of the housing tax is gradually being installed. However, the municipalities have not seen any endowments from the State, which means that the mayors will have fewer resources in 2019. For the mayors to see money entering the coffers of the town halls, it is necessary to tax the inhabitants.
If the choice is to invest in real estate, it would be possible to see an increase in local taxation, to be won, it is necessary to register for the simplified real tax system, which will allow all charges to be deducted.
There have been pros and cons in real estate investing. You have to follow the evolution of the market and be attentive to the ideal moment.