You want to buy a new home and rent it out? You can benefit from tax advantages thanks to the Pinel scheme. Discover the conditions to benefit from it as well as its advantages.

What is the objective of the Pinel scheme?

The Pinel device is a tax device whose main objective is to increase the number of new housing units dedicated to rental, and this at an affordable rent for tenants. Successor of the Duflot devicedevice, it is in force until December 31, 2024.

The Pinel scheme offers a tax reduction, variable according to the duration, to investors who have invested in housing within the scope of the scheme.

How is the investor's tax reduction calculated?

Within the scheme, investors have the choice between 3 durations (6, 9 or 12 years) of renting the property and of tax exemption. An investor who rents his property for :

  • 6 years will benefit from a tax reduction of 12% of the amount invested.
  • 9 years will benefit from a tax reduction of 18% of the amount invested.
  • 12 years will benefit from a tax reduction of 21% of the amount invested.

In fact, the longer the rental period, the greater the tax savings. Please note that the above-mentioned reduction rates will be gradually reduced in 2023 and 2024. An investor who rents his property during :

  • 6 years will benefit from a tax reduction of 10.5% of the amount invested in 2023 and 9% of the amount invested in 2024.
  • 9 years will benefit from a tax reduction of 15% of the amount invested and 12% of the amount invested in 2024.
  • 12 years will benefit from a tax reduction of 17.5% of the amount invested and 14% of the amount invested in 2024.

Note that the amount of the tax reduction is limited by two criteria:

  • Limit of the annual amount invested: The tax reduction is calculated on the basis of a maximum annual investment amount of €300,000.

For example, an investor who buys a property for €350,000 and rents it out for 6 years will benefit from a tax reduction of €36,000 (€300,000 x 12%) over the 6 years, i.e. €6,000 per year. The excess investment of 50 000 € will not be taken into account for the calculation of the tax reduction.

  • The limit of the number of dwellings acquired in a year: The investor cannot acquire more than 2 dwellings in a year.

When does the tax reduction start for the investor?

There are two scenarios for the acquisition of a home:

  • Or the investor acquires the housing before its construction is completed, in the framework of a Sale in Future State of Completion (VEFA). In this case, he will have to wait until the housing is completed and then rented before benefiting from it.
  • Either the investor acquires a new, rehabilitated or renovated property, available immediately for rental. He will also have to wait until the property is rented out to benefit from the tax reduction.

In both cases, the date of the rental of the property is decisive.

What are the obligations for investors who wish to acquire a property under the Pinel scheme?

  • The rental property (for 6, 9 or 12 years) must be unfurnished.
  • The housing acquired can be new, in future state of completion, rehabilitated or renovated. If the property is acquired in a future state of completion, the duration of the work must not exceed 30 months.
  • The rents offered to taxpayers may not exceed a certain threshold (ceiling), which is determined according to the geographical location of the property. The legislator has divided the territory into 5 housing zones (A bis, A, B1, B2 and C), and has defined rent ceilings within each of these zones. The rent ceiling is determined on the basis of the rent paid by the tenant in relation to the living area. In 2022(*)the rent ceilings were as follows:
    • Zone A bis : 17,62 € per square meter
    • Zone A : 13,09 € per square meter
    • Zone B1 : 10,55 € per square meter
    • Zone B2 : 9,17 € per square meter
  • The housing of which the investor makes the acquisition cannot present a price per square meter higher than 5 500 €. It should be noted that the surface area used to calculate the price per square meter is not the Carrez living area but the weighted living area, which is defined as the interior living area plus half of the ancillary areas.

For example, an investor buys a house at 300 000 € of 50m2 of interior surface, plus a balcony of 10m2. The weighted surface area will therefore be 55m2. Thus, the price per square meter of this housing will be 5 455 €/m² (300 000 / 55). Thus, this dwelling will be eligible for the Pinel scheme, as the price per square meter is less than 5 500 €.

Since one of the objectives of the scheme is to increase the construction of new housing, the ceiling on the price per square meter helps to encourage the construction of more housing. In other words, by investing 300,000 € on the basis of a market price of 5,500 € per square meter, one probably builds more surfaces than at 7,000 € per square meter.

What are the obligations for taxpayers who wish to become tenants of the PINEL scheme?

  • The dwelling must be the taxpayer's primary and not secondary residence.
  • The taxpayer must justify an income level that does not exceed a certain threshold.
  • The taxpayer must not belong to the investor's tax household.

This device can be a precious help to be taken into consideration when one wishes to invest in rental real estate. However, the Pinel scheme is not the only one that allows you to benefit from tax advantages when investing in rental property. Find out more about tax reduction and tax optimization schemes.

(*) Price on 26/07/2022 published by the official bulletin of public finances - taxes

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