In 2009, the Cyllier law came into force. This device allows real estate buyers to enjoy tax exemption for 9 years by buying a new property or under construction. This tax exemption is subject to fairly strict regulations. Thus, it is possible to wonder if the repurchase of mortgages is a solution to envisage by the purchasers who opted for this tax exemption. The Cyllier law, the renegotiation of the interest rate and the pooling of credits are they compatible devices?
Before answering the question of the compatibility of the three concepts, it is good to understand the very principle of the Cyllier law. The Scellier investment allows a citizen, who pays less than 8334 USD in income tax a year, to buy real estate without having to make a financial contribution. In fact, the investment is 100% financed by a financial institution and, therefore, subject to an interest rate. The investor does not enjoy his property. He is renting it. The rent can not exceed a certain amount. This commitment opens up another advantage: a tax reduction for 9 years. The tax exemption proposed by the French government is, therefore, a way to keep a stable budget.
Let us understand, now the principle of the renegotiation of the interest rate of a property. When the borrowing rate of mortgages is down, it is interesting to consider the renegotiation of its mortgages to take advantage of a reduction in monthly repayments. This decrease improves the household ‘s cash flow and, consequently, an option that should not be overlooked. Here, the financial institution renegotiates only the initial borrowing rate and changes the terms of the original loan. The initial loan is not closed and the borrower keeps the same financial institution.
Let’s look at the principle of consolidation of real estate loans. The redemption of credits is a concept, quite different from the renegotiation. Consolidation of credits brings together all current credits into one loan. The initial loan is settled. If the repurchase of credits does not take into account the loans with zero rates nor the loans with 1%, nothing does not exclude the possibility of renegotiating its credit entering in the device of the law Scellier. Is it a good idea to use credit pooling as part of a Scellier investment? If so, in which situation?
The device of the Cyllier law has advantages, but also disadvantages. Indeed, the professional situation of the investor can evolve over the years as it is possible that the real estate can not find a tenant. In these cases, the mortgage under the Scellier device will become a burden with heavy loads to carry for the investor. It is to avoid financial difficulties that the consolidation of credit redemption or renegotiation comes into play. It is also necessary that the redemption of credits does not make you lose your tax benefits ! To maintain your rights, two conditions must be respected: