As next year’s tax bill relates to this year’s earnings, you have until December 31 to put your affairs in order to take best advantage.
Despite the government’s determination to cut tax loopholes by 10 per cent, any changes it makes will not apply until 2011: any changes you make in the remainder of this year will still apply to next year’s tax bill.
With an average 48 days to complete a house purchase in Paris, you may still be able to take advantage of the loi Scellier and loi Malraux to buy rental property, although your projects should be well in hand by now.
Scellier allows 25 per cent of the purchase price to be used to reduce tax liability if the property fulfils several criteria, including being new, being environmentally efficient and being rented out for nine years. The acte de vente needs to be signed before the end of December and the property handed over.
The loi Malraux, which aims to protect the heritage through property restoration, also has to have the acte de vente signed before December 31, but the tax advantage kicks in if your first payment for the start of restoration is made by the same date.
It allows you to deduct the cost of conservation works on a building in a secteur sauvegardé (protected area) or Zone de protection du patrimoine architectural urbain et paysager (ZPPAUP) up to a limit of €100,000.
Like the loi Scellier, the property must be rented out for nine years, but secteur sauvegardé properties benefit from a 40 per cent cut in tax liability, with 30 per cent for those in the ZPPAUP.
Both plans are extremely complex and should not be taken lightly, so getting professional advice is a must.
Complexity is an issue, too, with two investment products that promise interesting returns but with the added bonus of a tax advantage.
Experienced and recommended fund managers are a must if looking to invest in innovative companies in fonds communs de placement dans l’innovation (FCPI) or in more local companies in fonds d’investissement de proximité (FIP).
Both FCPI and FIP give tax reductions of 25 per cent of the investment up to a limit of €24,400 for a married or pacsed couple, and €12,000 for a single person.
However, these funds have had an extremely hard time during the recent market crunch.
As for having a baby, that is another project that should be well advanced to benefit this year. A new baby changes the number of “parts” in your “family quotient” and has a direct impact on your tax liability, as a couple with one child will now count as two and a half parts.