Amortissement indirect et prévoyance privée 3e pilier

Indirect depreciation and restricted provision: why is it interesting?

Renting or buying a house is always a problematic choice. Sometimes, it can be more interesting to resort to buying your property rather than renting it out, especially when mortgage rates are low !

There are two ways to pay off the loan, either through direct amortization or through indirect amortization.

Indirect depreciation is a fiscally efficient alternative. This amortization through the associated pension funds makes it possible to maintain a low tax burden and to build up a pension capital for the entire amortization period. In this article, we show you the reasons why indirect depreciation is associated with a restricted 3a pension policy in insurance it’s a winning combination! This system allows for a leverage effect while allowing tax optimization.

By taking advantage of the indirect amortization plus the interest of the linked individual pension, you will obtain an optimization of your taxes!

What is indirect depreciation? Operation and benefits

First of all, it seems interesting to go back to the difference betweendirect depreciation and theindirect amortization of a mortgage debt. The main difference between these two systems is the evolution of the debt.

In the case of direct amortization, the mortgage debt decreases progressively from year to year. Therefore, the paid amortization amounts are deducted directly from the debt, decreasing as well mortgage interest and, in fact, the interests.

Before continuing, it should be remembered that interest is tax deductible and that the balance of the debt comes in reduction of the fiscal fortune. Therefore, as your interest expense decreases with direct amortization, your tax burden increases.

Conversely, with indirect amortization, your mortgage debt remains stable for a certain period. The interest on the debt therefore also remains stable, which also has the consequence of keeping yours constant tax burden.

While direct depreciation has the advantage of interest expense that decreases over the years, this same advantage has the disadvantage of reducing the amount you can deduct from your taxes and therefore reduce the tax burden.

Indirect amortization allows you to deduct the entire mortgage debt from your taxable assets until the loan is repaid. This damping system is achieved through a 3rd insurance policy also allowing payments made on this contract to be deducted from taxable income. Through indirect amortization, you finance a restricted pension policy that guarantees the amount of debt contracted instead of reducing it. In order to understand all the interests of this indirect amortization mortgage loan, it is appropriate to return to some methods of the restricted pension fund.

The main lines of restricted pension?

Before continuing on the reasons for this tax optimization of your mortgage by choosing indirect amortization, it is also interesting to return to the advantages and interests of your linked 3a pension contract. The Swiss pension system is based on 3 pillars. The 1st pillar corresponds to a compulsory state pension for all persons who have been resident in Switzerland since the age of 21 or who have worked in Switzerland since the age of 19. The 2nd pillar corresponds to the compulsory occupational pension for employees whose annualized income exceeds 21,510 francs.

These first two pillars make it possible to adequately maintain the previous standard of living. Here it is 60% of the salary in work for retirees who have pursued a professional career without interrupting contributions. This 60% is clearly insufficient to be able to maintain their standard of living, the Confederation therefore encourages people to contribute to a 3rd pillar which corresponds, in fact, to an individual pension. This arrangement can be done through3rd tied pension and a free board 3b.

Here we are mainly interested in the restricted pension agreement which allows contributions paid within certain limits to be deducted from taxable income.

The maximum deduction varies depending on whether or not you are affiliated with a 2nd pillar, i.e. a BVG occupational pension plan. This tax advantage of the restricted pension was provided precisely to facilitate the creation of additional retirement capital. The deductibility of premiums from tax income as of January 1, 2022 is:

  • For affiliates of the 2nd pillar of 6,883 fr.
  • For non-affiliated people in the 2nd pillar of 34,416 francs, but a maximum of 20% of the income.

The policy of a 3rd pillar 3a insurance can be used to build or buy a house for your own needs, but also to amortize an existing mortgage debt.

For more information on the different forms of individual pension insurance, do not hesitate to contact our advisors.

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