Do you have a real estate investment project? Would you like to take advantage of an attractive tax credit? The Pinel law is for you! This system introduced by the government allows to enjoy tax and financial benefits in a real estate purchase, in return for a lease for a fixed period. Even subject to many conditions, this measure is particularly interesting. Here’s why.
The principle of the Pinel law
The Pinel law (or Pinel law) is a tax exemption measure that applies to a real estate purchase in return for a rental of the property for a specified number of years, and under certain conditions.
This system is part of the continuity of the Alur law (or Duflot law), but it has relaxed some of its rules of application to stimulate more rental investment. Thus, when you buy a property via the Pinel law, it is possible to:
• Choose from 3 lease commitment periods, each corresponding to a tax credit (knowing that the duration is flexible during the commitment):
– 6 years for 12% tax credit
– 9 years for 18% tax credit
– 12 years for 21% tax credit
• To rent property to family members (ascendants or descendants);
• Make a real estate purchase in the former, under certain conditions;
• Show a land deficit during the first years (when the expenses are higher than the rental income) to benefit from an additional tax reduction.
A real estate investment under conditions
In return for the tax credits proposed by the Pinel law, the investor must respect several conditions when buying real estate. These criteria relate primarily to the good itself:
• The scheme applies for property acquired between September 1, 2014 and December 31, 2016;
• It concerns the purchase of new or finished real estate, complying with the RT 2012 standard or the BBC label in terms of energy performance;
• Old real estate is also eligible if it is:
– Old housing which has been transformed into new housing;
– a dilapidated dwelling which has been rehabilitated;
– A non-residential space that has been modified in housing as a result of work;
– Other criteria are taken into account, detailed on this page.
However, the Pinel law only works on a property investment made in an eligible area. The areas concerned correspond to strong rental requests, and they have been divided into 4 categories:
• Zone A (Paris agglomeration, Côte d’Azur, Lyon agglomeration, etc.);
• Zone A bis (Paris and several municipalities in neighboring departments);
• Zone B1 (cities of more than 250,000 inhabitants: around Paris, Annecy, Bayonne, La Rochelle, around the Côte d’Azur, in the DOM or in Corsica, etc.);
• Zone B2 (cities of more than 50,000 inhabitants on the outskirts of the Île-de-France, on the coasts or in expensive border areas).
The complete list of municipalities concerned is available on this site.
Other conditions come into play that affect the price of real estate investment (a total amount limited to € 300,000 per year, with a purchase price per m2 below the threshold of € 5,500), rents for housing (on average 20% below market prices) and tenant profiles (which must not exceed certain resource ceilings).
Why Pinel Law is a chance for investment?
Despite these conditions, both purchase and lease, benefiting from the Pinel law for a real estate investment can prove very advantageous. Here’s why :
• The tax credit: with an investment cap of € 300,000, and with a tax deduction of up to 21%, it is possible to save up to € 63,000 over 12 years.
• Mortgages: lending institutions are more flexible when it comes to the Pinel system, it is easier to subscribe to a mortgage through this and the contribution is not necessary (find out more about Vousfinancer.com ).
• Investment in new property is a guarantee of safety: reduced energy consumption thanks to the necessary labels; construction insurance valid for 10 years (the buyer is exempt from repair and maintenance costs during the term of his engagement).
• The eligibility conditions ensure a fast and sustainable rental: not only are the areas concerned “tense”, ie the demand is much higher than the offer; but in addition, the rent ceiling makes prices attractive to a larger number of households.
• Financial benefits: in addition to tax deductions, the Pinel law allows you to enjoy reduced notary fees (2 to 3% of the amount of the real estate purchase) and the exemption of the property tax during the first two years.
The principle of the Pinel law is to cover, through numerous tax advantages, the cost of the investment during the commitment period. It is thus a device which makes it possible to build up a patrimony more easily, with the promise, at the end of the commitment of renting, to be able to benefit from the good as you intend it: to live there, to continue to the rent at the desired price, or to sell it with added value.