What property covers in a wealth strategy
It covers property held to live in, to generate income or to pass on: directly, through a société civile (French non-trading company) or as shares in property companies, such as SCPI (French property investment companies).
Direct ownership gives you control of the property, along with its constraints: tenants, upkeep, works, vacancies. Shares pool management and buildings, in return for fees and a liquidity that depends on there being buyers.
The taxation of rent depends on how the property is let: unfurnished letting produces property income (revenus fonciers), while furnished letting falls under a different regime.
Income, costs and tax
A rental investment is judged on what remains after costs, income tax and social charges, not on the rent. Property tax, upkeep, insurance, management, vacancies and works weigh on it every year, depending on the tax regime.
The regime, simplified or actual-expenses, is chosen according to your costs; opting for the actual-expenses regime commits you for several years. It is in your tax return that the tax rules are applied to your case.
Passing on a property
A property does not divide easily. Gift, démembrement (splitting ownership between usufruct and bare ownership), société civile: the transfer is prepared with your notaire (French notary) to avoid an indivision that nobody chose.
How the firm works
For a project, the firm calculates the real cost (deposit, monthly repayments, charges, tax, vacancies, works) on explicit assumptions discussed with you, then compares it with other uses of the same sum.
For property you already own, it checks consistency: weight, form of ownership, debt, net income, succession. Depending on the case: keep, restructure with your notaire, or sell.
Who it is for
Owners and prospective investors who want to place property within their strategy:
- those whose wealth consists of one or two properties;
- those who want to measure the real cost of a buy-to-let investment;
- those preparing to pass on property held in indivision (undivided joint ownership) or through a société civile;
- those undecided between direct ownership and shares.
What the firm looks at first
- The share of property in your wealth, and what it leaves available.
- How it is held: directly, through a company or as shares, and the tax and inheritance consequences.
- Financing: the term and cost of the loan, and your margin if the property is vacant or needs works.
Limits and risks
Although a tangible asset, property still carries risks.
- Loss of capital: a property’s value can fall, depending on the local market and the condition of the building.
- Income not assured: vacancies, unpaid rent and works reduce or interrupt rental income.
- Limited liquidity: selling a property or shares takes time and requires buyers.
- Concentration: too much property leaves little room for everything else.
- Tax: the rules on property income and capital gains change with the law.
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