The RFR Reference Tax Income is a device for assessing the income of a tax household for a year. It makes it possible to determine the rights to several exemptions or allowances and advantages. However, when a certain threshold is exceeded, one risks losing one’s advantages. Are you in the case and do you want to know how to go below this threshold? Follow our advice!
A summary of how the RFR works!
Before knowing how to lower the RFR, it is important to know how it works. Just like the Pinel device which allows you to benefit from tax exemption, the RFR also offers several advantages. Indeed, the Reference Tax Income is the annual amount of income received by a taxpayer.
The latter is calculated by the tax authorities. It is on the basis of this sum that the administration can determine whether a tax household can benefit from certain tax or social advantages. Benefits such as relief from housing tax or exemption from real estate capital gains. Among the advantages, there is also the granting of a check in advance and bonuses for work in a habitat.
To calculate this amount, two elements are taken into consideration. On the one hand, it is the net sum of the taxpayer’s income, while taking into account the daily life of the household. And on the other hand, the amount of the various charges used to have the total sum of tax to be paid . In the majority of cases, the RFR is entered in the taxpayer’s tax notice. Now that you know more about RFR, we can move on to the next step.
A few tips for lowering your reference tax income
Have you exceeded the RFR threshold and want to lower it? It is quite possible. But, to get there, you have to be willing to make some sacrifices. To do this, here are some tips.
Reduce your income
The Reference Tax Income does not concern the tax payable, but rather all taxable income. To lower the RFR, you must therefore earn less. By reducing your income, you will pay less for the RFR. But, it is difficult in some cases. This is for example the case of people who are not independent. In this case, other specific possibilities should be explored. It should be noted that these possibilities are often subject to application conditions.
Pay a pension to one of your children or to a relative
In order to reduce the RFR, you can deduct a pension paid to one of your children. That said, for this to be possible and above all easily doable, the child must be of legal age. For minor children, this solution is much more delicate. In addition, you can deduct a pension paid to your parents to reduce the RFR. However, you will have to be careful, because there are application conditions. Anyone who does not respect them can be punished for tax evasion.
Deduct your business expenses
On gross income, a fixed reduction of 10% is granted. When you factor in business expenses, you can easily exceed this reduction. So choose to deduct these costs to significantly lower your RFR. It must also be said that, in the same vein as the piniel device, this solution can also reduce the weight of tax on your income.
Sell your investments for less
The RFR includes your shares, interests in shares, PEA, securities account, etc. You must indeed mention all these investments when declaring your income. You can sell these for less than the amount you bought them. If you do this, you will decrease your income. This will have the effect of reducing the RFR. Thereafter, you will be able to reinvest later if you wish. It should be noted that this option is limited to the same year in France.
In short, with a few actions, you can successfully lower the RFR. So don’t hesitate to use it