The “paper stone”, which refers to vehicles for investing in real estate in the form of shares, is increasingly appreciated by French savers. It must be said that it allows access to the still attractive returns of real estate, without the management worries generated by the acquisition of a property live. At SCPI (civil real estate investment company) it is the most well-known stone stone vehicle, and it offers many advantages, but SCI also has many aouts. How to make the right choice?
Is it interesting to buy SCPIs in life insurance?
SCPIs have many advantages. But they still have two major drawbacks: taxation and fees.
Property income is particularly taxed in France, at IR scale as well as social levies of 17.2%.
Note that at the level of taxation, it is possible to benefit from a softer taxation by buying shares of a SCPI (civil real estate investment company) that invests in real estate abroad. This type of SCPI escapes the social levies of 17.2%, and is subject to an IR rate that is often lower than the rate in France.
Management fees are levied on their efficiency rates displayed by yield SCPI are net of management fees. So they are sort of “indelores” for the investor.
On the other hand, yes Display returns are also net of subscription fees (An investor who buys € 100 of a SCPI who then pays 4% net of management fees and social security contributions will receive a € 4 dividend), these fees are not painless when reselling SCPI shares …
The subscription fee is usually between 8 and 12%. Concretely, if you buy a share of SCPI 100 € and you want to resell it a few months later, you will recover about 90 € (unless there has been a revaluation of the price of the share in the meantime). So it takes a few years of distribution (and ideally a few price revaluations on the part) for the investment to be really profitable.
Paying high fees on a real estate investment is not so surprising. When making a real estate investment live, he pays notary fees (8%), but also agency fees ranging from 4 to 5%. For a global investment of € 100,000, for example, the value of the property is in fact € 87 or € 88,000.
However, it is in the best interest of the investor to seek solutions to limit the cost of subscribing to an SCPI, and also to limit taxation. Precisely, it is possible to integrate SCPIs into life insurance.
When they are housed in life insurance, SCPIs benefit from the attractive taxation of the envelope : only withdrawals are subject to the IR, TMI or flat tax of your choice, and can benefit from tax benefits when the contract is more than 8 years: deduction of 4,600 euros on earnings (9,200 euros for a couple) and a reduced rate of 7.5% for courses below € 150,000 (€ 300,000 for a couple).
In addition, insurers often offer discounts on SCPI subscription fees. Usually around 10% for a direct purchase, these are for example reduced around 7% on better placements.
On the other hand, within the life insurance contract, the units of SCPI are units of account. The insurer will therefore charge a management fee, which materialize on the number of units held and will therefore come down the amount of the investment (excluding revaluation). You must choose a contract with poor management frequency on the units of account. Autre point de vigilance: certain insurers that retain a share of the profits distributed through the SCPI, generally 15%, which is the maximum allowed by the insurance code. In the case of a SCPI that delivers 4% of income, this is 0.6% that the insurer deducts, leaving only 3.4% for the saver… before contract management fees.
Priority should be given to life insurance policies that pay 100% of the performance of SCPIs, such as the Freedom of Life improvement contract. For several years now, besttaux Liberté Vie reaps the rewards of the trade press and is designated the best, or one of the best contracts on the market, for investing in SCPI. Among the qualities most often cited are:
- The payment of 100% of the rents generated by the SCPI, on the fund in euros. This makes it possible to secure rental income initially, as the subscriber can arbitrate later, benefiting from free online arbitration.
- The actual holding of the units on the 1st day of the month following the payment, to be compared with the multi-month enjoyment periods imposed as part of a live investment.
- Contract management fees of 0.5% only.
- A wide selection of SCPIs available, with some of the best media on the market, like PF Grand Paris, ActivImmo, Epargne Foncière, Epargne Pierre or Immorente. So many SCPIs in our 2022 list.
Our ideal life insurance policy to invest in SCPI
Why choose an SCI over a SCPI in life insurance?
With declining returns on euro funds, policyholders who wish to maintain a fair level of return on their contract have no choice but to look at the units of account available in the life insurance contract.
In multi-media contracts, savers often have UCITS (shares, bonds, diversified) with higher than expected returns on the fund in euros (especially for equity investments). They are, though much riskier than euro funds : no capital guarantee and the possibility to see the capital fall sharply in the event of a fall in market shares.
So what solutions are left for individuals to get returns without taking too much risk? Are you sure that SCPI (civil real estate placement companies) : these vehicles have benefited from attractive yields of a physical real estate estate, for a recognized solidity (The risk of decline is low, SCPI shares tend to climb each year). More subscription fees for this type of product are high (about 10%). SCPIs are therefore very long-term products. It takes several years of return and price increases to rent the investment.
In the short to medium term, however, there is another solution that will allow you to get it good net profitability without taking too much risk: SCI (civil real estate companies). Plus knows a tool to facilitate the management of real estate between several individuals (including family SCI), at SCI can take the form of one. unit of account within a life insurance contract. It is then managed by a management company that will set up a patrimony and capitalize on rental income. The investment can take several forms: physical real estate, but also SCPI, listed real estate companies or real estate funds.
In relation to SCPI, SCIs are less expensive : we find of multiple vehicles that take “only” 2% entry fee. Or, the yields offered on this type of product have been quite good in recent years: around 4% ** (and even 5 or 6% ** for the best of them). With such an annual performanceentrance fees are paid in less than 6 months. Over one year, the performance is higher than many euro funds, while over 5 years, it does not have to blush against the performance of equity funds.
Our life insurance contract is ideal for investing in paper stone
Summary table of SCI and SCPI comparison
Finally, compared to SCIs available only in life insurance, SCPIs offer more investment frameworks: live, on credit, in France or abroad, or in life insurance. You should then choose the framework that best suits your situation: your goal, your investment horizon, your marginal tax rate, and so on.
In particular, the fact that SCPIs can be purchased on credit is a very important asset for this investment, which explains why they are so successful compared to other paper stone vehicles.
In relation to SCPI, Most importantly, SCIs have the advantage of having much lower entry fees. They therefore correspond to an inexpensive solution for investing in real estate in life insurance. While a SCPI will be truly profitable after several years (minimum 5 years), an investment in SCI can be considered in the short to medium term. With an entry fee of 2%, if the SCI meets its 4% profitability target ** over one year, the SCI outperforms the fund in euros from the first year.
SCI, OPCI, SCPI: discover our contact to invest in paper stone
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Like any investment, real estate has risks:
– Decreased investment value. Invested capital is not guaranteed. The share value of an SCPI evolves over time, in close relation to the state of the business real estate. This situation follows successive cycles, with up and down phases.
– The decrease in rental income. In a more favorable economic context, the decrease in rental income paid to partners is due to a decrease in the financial occupancy rate and / or a decrease in the overall amount of rent paid by tenants. However, this decline can be mitigated by the risk-sharing effect due to the diversification of real estate and housing diversification of the company’s portfolio.
– Liquidity. As SCPIs and SCIs are not a listed product, they have less liquidity compared to financial assets. The terms of the sale (délais, prix) may vary depending on the evolution of the company’s real estate market and foreign exchange markets.
* TDVM: The Market Value Distribution Rate measures the historical level of distribution. This is the division of the gross dividend before the release levy paid in respect of year N (including outstanding installments and share of capital gains distributed) by the average acquirer’s share price in year N.
** Past performance is not a reliable indicator of future performance.