The Pinel law created by Sylvia Pinel, Minister of Housing and Manuel Valls former Prime Minister, was passed by the deputies on 1er September 2014, within the framework of the 2019 finance bill. This law enables the building up of real estate assets while paying less tax. Each taxpayer domiciled in France can benefit from a tax reduction following an investment in rental property in the new then in the old.
How does the Pinel Law work?
This law was launched as a replacement for the Duflot system, which was found to be too restrictive. The Pinel law is applicable from the time of the purchase of new housing rented for at least 6 years, between the 1er September 2014 and December 31, 2021. It is applicable to 2 homes per year maximum.
The advantages of the Pinel law
Take advantage of a tax reduction by becoming an owner
To encourage taxpayers to invest in new rental housing, the Pinel law offers a tax reduction formulated as a% of the purchase price, calculated by following the duration of the rental.
Income tax is then lowered during the rental, which can range from a minimum of 6 years to a maximum of 9 or 12 years.
A long rental will be more interesting for the owner
- 12% of the amount of the investment for 6 years (2% per year).
- 18% for 9 years (2% per year).
- 21% for 12 years (2% the first 9 years then 1% over the remaining 3 years).
Limit of tax deduction
You have to take into account 2 ceilings to be able to benefit from the Pinel law
- € 300,000 is the maximum amount for the purchase of new property per person per year. Which leads to a maximum tax deduction of € 63,000
- € 5,500 maximum and the price per square meter of living space.
Deduction of charges from the tax notice
When declaring your property income (CERFA n ° 2044), it is possible to deduct charges such as maintenance, management costs, repairs, common interests or even property tax from your rents.
To be able to benefit from the tax advantage provided for with this law, there are some conditions to be fulfilled, such as the type of property, the level of energy performance during the investment, the geographical location of the housing, the tenant and finally the rental.
To benefit his family
A significant advantage over the Duflot law, with the Pinel law it is possible to rent out your property to a member of your family, by which we mean either your parents or your children. Note that the tenant must not be part of the owner’s tax household.
Conditions for benefiting from the Pinel law
The taxpayer must take these few points into account in order to benefit from them:
- A period of 6.9 or 12 months
- Be a principal resident
- Unfurnished accommodation
- Taking into account the ceilings set by the Pinel law
Territorial areas must be respected
The Pinel law defines an area A bis, A and B1, corresponding to a so-called “tight” real estate market:
- Zone A bis corresponds to Paris and its inner suburbs
- Zone A is the rest of the Île de France, the Côte d’Azur, Marseilles, Lyon or even Montpellier
- Zone B1 corresponds to cities of more than 250,000 inhabitants, Corsica, DOM-TOM and cities with a high real estate market such as Bayonne, La Rochelle, Annecy, etc.
There is a 4th zone, B2 (city of more than 50,000 inhabitants), which can benefit from the advantage with approval from the prefecture.
Finally, opting for the Pinel law investment allows you to become the owner of a new home, while being able to benefit from a maximum of € 63,000 in tax deductions while boosting the real estate market.