Did you know that nearly one in two taxpayers did not pay income tax in 2015?

Let’s explore some tools that could help you reduce the bill charged by the State, or even avoid paying taxes altogether! If you prefer to see the animated video version, it is below:

The government uses income tax for various expenses: education, security, health, justice… Contribution is therefore necessary to avoid losing these public services. Yet, many taxpayers are now managing to not pay taxes while growing their wealth! How do they do it?

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Two methods coexist: reducing taxable income and utilizing tax deductions.

1/The first method:

This is not about reducing your income, but about deducting your declarations to lower the taxable base. If the pie is smaller, the share for the State is just as big!

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  • 1. When you invest money in a retirement savings plan such as a REEE or MADELIN, part of your investment is deductible from your taxable income. Therefore, you pay less tax while preparing for a more comfortable retirement.
  • 2. If you own a rental property, use the property deficit! When you carry out certain works and these expenses exceed the income you receive, you can subtract the difference from your other income on your declaration.
  • 3. You can choose to invest in furnished rentals. The depreciation of the premises and the furniture therein reduces the amount of taxable income. In some cases, you can deduct your deficits from your total income.
  • 4. Purchasing a single property also has benefits for reducing your taxable income: you can save on existing real estate income tax if you buy it on credit thanks to the deductibility of interest. And ultimately, you regain full ownership of the property without additional costs!

2/The second method

Now that your taxable income has decreased, it’s time to claim tax reductions that are directly subtracted from the amount of your tax bill.

  • 1. If you have capital to invest, invest in a PCIM or an ICPC! These somewhat indigestible names are funds that finance French companies. You can reduce your tax by up to 18% (see 38%) of the amount of your investment under certain conditions! And as a bonus, if you hold the shares for at least 5 years, the capital gains realized are exempt from income tax! A bit risky certainly, but potentially very effective…
  • 2. It also works if you invest directly in a non-listed French SME, with essentially the same conditions!
  • 3. If you are interested in investing in Overseas territories, you have the option to do the Girardin Industrial. The goal is to help local businesses by offsetting the additional costs due to geographical remoteness. You can reduce your tax by up to €40,909 and carry forward the reduction for the next 5 years if your tax reduction is less than the expected tax reduction!
  • 4. Regarding tax reductions, real estate is not left out. Renovating a property under the Malraux law can allow you to deduct 30% of the costs related to the work from your tax and additionally benefit from the property deficit mentioned earlier!
  • 5. Thanks to the PINEL system, by acquiring a high-energy-performance property to rent for at least 6 to 12 years, you can reduce your tax by up to 21% of your investment and the reduction is spread over 6 to 12 years.

Here are some ideas to increase your income without suffering the usual tax increase that results! Finding investments online that align with your wealth project will allow you, under certain conditions, to enrich yourself while your income taxes melt away like snow in the sun!

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How to Avoid Paying Taxes?