Investing in REITS through the life insurance

take Advantage of the taxation of life insurance by benefiting from the attractive stone paper, it is possible. But beware of the fees charged by the insurer.

If the life insurance has been a long-time the preferred investment of the French, the reduced performance of funds in euros (fell 1.4 % on average in 2019, up from 1.8 % in 2018) can lead some investors to turn to more remunerative. Still, the life insurance will retain all its interest with respect to its tax advantages.

on the other hand, the REITS have a payout ratio average of 4.51% compared to 4,35% in 2018 (according to the website France-SCPI). In these conditions, you may be tempted to neglect life insurance for the benefit of the stone paper. An interesting alternative exists : invest in REITS through a life insurance contract.

Practice >> Learn more about investing in REITS in partnership with Corum

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in view of the declining performance of euro funds, the insurers have developed life insurance contracts in units of account based on an offer more rich media placement, among which the REIT. Specifically, either you already have a life insurance policy, either you sign up, and integrate SCPI chosen within the bouquet preselected by the insurer.

benefits accrued

The benefits are numerous. You will enjoy all the benefits of stone paper without the disadvantages of a real estate investment direct : there is no need of a notary, or the sake of a vacancy or rental management and you get the bonus of broad choice of real estate assets not accessible to an individual (real estate business, including international...).

You add to this the benefits of life insurance, starting with the flexibility of payments, the latter being free or scheduled, your choice, but also a transmission easier. In the event of death, your contract is in effect transferred to the beneficiaries named, according to a tax structure that is more lightweight (152 500 € abatement by a beneficiary for amounts invested before age 70).

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The REITS included in a life insurance contract under because of the tax advantages thereof. While the rents from the units of REITS shall be imposed, as the rents from the leasing of real estate, as property income, when you hold shares of REITS in the context of life insurance, you are not taxed as in the case of redemption, total or partial, of the contract.

You have the choice between taxation at the income tax or a withholding tax. After 8 years of detention of the contract, you get a tax allowance of 4600 euros (9200 euros for a couple). Social levies apply, however, regardless of the mode of taxation is chosen.

The price at which you purchase of SCPI in the context of a life insurance policy is also a rebate (about 2.5 %) in relation to a purchase online. Another advantage is that the invested funds have a liquidity greater, a few days sufficient to make an order of transfer. In life insurance, it is the insurer who must make the necessary arrangements so that you can recover your bet. The period of enjoyment (deferred dividends) is shorter or even non-existent.

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Finally, you get the benefit of profitability attractive of the SCPI in saving you the risk of the market, these being assumed by the insurer. This explains the fact that the selection of the SCPI proposed in the framework of the life insurance to be restricted (about 20 % of the market), the insurer focusing on the safest of them.

disadvantages not to be overlooked

This alternative, however, is not devoid of some disadvantages. First of all, while it is possible to buy shares of REITS through a loan, this is not the case in the framework of a contract of life insurance. You must have the savings necessary.

Practice >> Learn more about investing in REITS in partnership with Corum

moreover, contrary to a holding of units in direct, you are not insured to collect the full amount of revenue generated by the REIT on which you will have invested your savings. The insurer can retain a portion (up to 15 %) in respect of its participation in earnings.

The choice of REITS is also more limited than when you buy direct, the insurance companies operate a drastic selection.

Finally, and most importantly, the performance of REITS syndicated in the context of life insurance is lower on account of the costs of management of the contract, or entry fees or arbitration, charged by the insurer, who come to constrain their performance. Not to mention that it can also provide for penalties in the event of early withdrawal or capping the investment in shares of REITS.

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