Preparing to finance a property purchase (or works) while making significant tax savings is possible, with a home savings plan
Buying a new home, having one built or undertaking renovation works? Is that your dream? But you are not quite ready to take the plunge today… Then opening a home savings plan is a more than sensible alternative.
It is a solution that is both prudent and profitable: by paying a few tens or hundreds of euros into such a plan on a regular basis, you not only build up part of the capital needed for your project, but you will also be able, when the time comes, to obtain a mortgage on particularly favourable terms — and, the icing on the cake, part of the contributions paid can in the meantime be deducted from your taxable income!
Tax advantages
It is not too late to benefit from this tax break on your 2021 income and thus reduce the tax you pay in 2022. Provided, on the one hand, that you take out a plan before 31 December (and have of course started paying in) and, on the other, that you meet the framework set out in law.
Beyond the plan’s purpose — financing the construction, purchase or conversion of a home used for your own residential needs (in other words YOUR MAIN RESIDENCE) — it must be taken out with an approved savings institution.
Moreover, to encourage young households and tax households not to put off saving for too long, the maximum deduction is linked to the age of the youngest adult plan holder in the family (beyond the age of 41, the saving is smaller). Where there are children, the gain is more substantial. A few examples: for a couple with no children, depending on age, the deduction ranges from €1,344 to €2,688, and for a couple with two children, from €2,688 to €5,376…
Finally, one fundamental condition remains: the term of the plan. Your plan must be taken out for a term of 10 years. That said, nothing prevents you from releasing your money before the anniversary date, provided you do not cancel your plan and use the savings in accordance with the law. In other words, you cannot use this money to pay for a holiday, a car or anything else!
The law allows you to use the funds to finance your main residence, to buy or convert your main residence, or to make an additional repayment on a loan taken out for the same purposes.
Otherwise, you risk being taxed retroactively.
And as a “bonus”, the state guarantee
The home savings plan holds another “pleasant” surprise: from the end of the 3rd year, it can allow you to obtain a state guarantee on the loan! That is anything but insignificant when you cannot offer sufficient guarantees of your own.
Here too, of course, the legislator has set conditions to prevent “arrangements” and “projects” from proving too fragile… Here are two of them: the monthly repayment on the loan must not exceed 40% of disposable income, although some banks accept a debt ratio of up to 50% of salary while others have no such limit at all.
Finally, that same loan must represent at least 60% of the cost of the home… In the end, however, this guarantee can amount to as much as €153,135.
The application for a state guarantee is submitted by the approved bank or savings institution granting the loan (at the same time as the application for individual housing assistance).
Would you like to take up this opportunity? Then get in touch with our brokerage firm without delay. We will go through every aspect of your project with you, and everything you can expect from opening a home savings account.
