Can we deduct loan interest for rental?
Like millions of French owners, you have undoubtedly taken out a mortgage to buy your property. The taxes provide for different tax conditions depending on the operation of your property.
Rental investment provides access to favorable provisions: The State thus encourages owners to rent their property, which then allows individuals to find affordable housing to live there.
Can we deduct loan interest for rental?
The answer is yes ! And it is also possible even if you do not receive your first rents.
A rental investment may take some time to receive the first income: renovation work, absence of a tenant, etc.
The interest on the loan represents a charge and as such, this charge can be deducted during your tax return.
Importantly, the tax administration may seek to verify whether the property was purchased for the purpose of rental.
If you can justify your rental investment, then no problem you can deduct the interest on your loan in the same way as renovation work, for example.
To learn more, we invite you to consult these additional resources:
If you are subject to the real tax regime, you can deduct from your land income the interest on loans contracted for the purchase of rental housing. You can also deduct borrowing costs.
You can only deduct the amounts paid during the tax year and you must justify their amount.
Your loan interest:
You can only deduct this interest if it relates to a loan taken out for the conservation, acquisition, (re) construction, extension, repair or improvement of the rented buildings.
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The tax authorities will linger in verifying that the property was acquired for rental purposes only. If this is the case and the delay between the charges deducted and the rental date are justified, the taxpayer can deduct the charges paid to reduce taxation. Forgetting would result in a consequent surplus of tax and social security contributions.
We focus here on the interest of the loan which represents THE item often repaid before the property is rented. The strategy extends of course to all charges relating to the rented property insofar as they are deductible: works, insurance, etc. It goes without saying that the properties rented under the tax systems such as Pinel are concerned in the same way.
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