Second homes - The new way to invest and play!

In fashion since the experience of successive confinements, second homes are enjoying a real revival. On the one hand, 50% of buyers are looking for a vacation home, as a recent survey by the PAP website reveals. And secondly, in the new post-Covid era, 30% of buyers are interested in living there part-time, thanks to telecommuting. These are great opportunities to maximize the occupancy of this home, which competes with the main residence. And when the house remains vacant, a seasonal rental will also generate income to cover maintenance costs and local taxes. By the sea, at the foot of the mountains or in the countryside, who hasn't dreamed of a second home? Synonymous with a change of scenery and vacations, this haven of peace is also an investment. Let's take a look at all the clues to help you find that rare gem!

1st track
a beautiful location

Beach, countryside or mountains? Apartment or house? New or old? Near or far from your main home? These are all criteria that come into play when choosing a vacation home, and naturally result from the way you choose to spend your holiday. The aim is to have fun! There are a few basic rules to ensure that this investment lends itself to maximum use:

• give priority to the quality of the location, so that the property offers nearby amenities, shops, points of interest for tourists... all to maintain the desire to stay there personally or with vacationers...
• Take into account the distance between the main residence and the future second home. The further away it is, the more difficult it will be to enjoy it often;
• consider nearby transport networks and facilities, such as freeways, train stations or airports, to facilitate access.

3.6 million second homes

That's the number of second homes in mainland France in 2020, i.e. 1 in 10. While the average price is €250,000, it varies widely from region to region: from €351,600 in the Paris region to less than €150,000 in Burgundy, Auvergne and Franche-Comté. By way of comparison, Brittany boasts a median house price of €194,000.

Source : Insee statistics - 01/21

2nd track
a good investment

There are many different reasons for buying a second home: to indulge yourself, to build up your property portfolio, to prepare for retirement... Whatever your motivation, it's important to prepare for the purchase. As with a principal residence, you need to ask yourself a few practical questions about ..:

• surface area. Choose houses with 3 bedrooms, ideally 2 bathrooms and a small garden to enjoy the outdoors. Target areas close to shops and/or the beach. Be careful not to think too big, as this will result in higher costs.
• Condition. If you can afford it, it's best to choose a residence that's habitable as is. That way, you'll avoid the hassle of endless renovation work. Look for products that require few repairs;
• Price. Choose properties offered for sale by your notary. They benefit from a real estate appraisal that allows them to be found at their fair price on the real estate market. In their latest Baromètre de l'immobilier "PRIX", notaries reveal the median prices of properties in Brittany

(https://www.notaireetbreton.bzh)

Good real estate dealsFollow your notaire's advice to buy :
1 good location
1 secure purchase for 2
1 good asset strategy
1 succession planning

3rd track
The best return

To avoid over-taxation of rental income, it's advisable to opt for the status of Loueur en Meublé Non Professionnel (LMNP). To qualify, income from this activity must not exceed €23,000 per year, or represent 50% of the owner's total income. Better still, if the property can be classified as a
" Meublé de tourisme " with a rating ranging from 1 to 5 stars, it qualifies for an exclusive tax allowance of 71% under the micro-BIC scheme. In all cases, rental income is taxed as industrial and commercial profits (BIC) under 2 regimes:

• the flat-rate system (or micro BIC), which simply requires you to state the total amount of income, with a 50% allowance for standard furnished rentals or a 71% allowance for furnished tourist accommodations not exceeding €70,000;
• the actual system, which requires you to keep accounts showing rental income and the deduction of expenses to obtain the actual amount. A balance sheet, income statement and notes are required each year. Although restrictive, this system is often more attractive from a tax point of view, as long as expenses and depreciation exceed 50% of income.

Think about it!

"A second home offers many advantages as a holiday destination, and is a good investment for the future.

4th path
The lowest running costs

The budget devoted to your second home should not take precedence over that of your main residence. In addition to the purchase price, there are a number of expenses and costs that you need to plan for from the outset:

• maintenance and repairs. Hedge and lawn trimming, swimming pool maintenance... all this comes at a cost, especially if you want to take it off your hands and entrust regular upkeep to a personal services company. Almost 60% of second homes are older houses. If you want to keep your pied-à-terre in good condition, you'll need to plan for minor repairs, more or less frequently depending on the property's geographical location (for example, shutters by the sea will need repainting more often). In addition to this routine maintenance, certain elements may deteriorate over time or at the time of purchase. In such cases, you'll need to consider more substantial work (changing the boiler, etc.);
• insurance. Second homes are ideal targets for burglars. That's why it's essential to take out insurance to protect your property against theft, just as you would for your main residence. It will often be more expensive, as the house is unoccupied for a large part of the year. The insurer may require you to install anti-intrusion devices. Don't forget to insure against fire, water damage and other similar risks. To insure yourself against these inconveniences, you can either ask for an extension to your multi-risk home insurance (with an additional premium), or take out specific insurance adapted to the location (for example, in the high mountains, there is more risk of avalanches than forest fires);
• taxes and current charges. There are, of course, consumption and network subscription charges. Local taxes are another expense. And don't forget transportation costs!

Christophe Raffaillac