Rental investment – The Pinel Act
The Pinel Act is a fiscal measure applicable to all the French taxpayers. It consists in helping private individuals wishing to invest in the new build, with an income tax reduction over a minimum period.
Tax exception is calculated on the amount of the real estate property and determined according to the following 2 limits:
- €300,000 per taxpayer per year
- €5,500/sqm of living space
The tax reduction varies based in the term of the rental:
- 12% for an investment over 6 years
- 18% for an investment over 9 years
- 21% for an investment over 12 years
The investor can receive up to €63,000 in tax advantages over 12 years.
Still in effect in 2022, the tax exemption rates will then be gradually reduced in 2023 and 2024.
Conditions to benefit from the Pinel Act
To benefit from the Pinel Act, you must rent a new accommodation as a primary residence over a period of 6, 9 or 12 years.
- A new accommodation, off-plans (VEFA)
- The construction of an accommodation
- Old housing subject to renovation work with high environmental performance
- Premises transformed into residential accommodation
Since January 1, 2021, the tax reduction only concerns accommodation located in condominiums and does not apply to houses.
The owner commits to comply with the limits of rent and tenant income. It is possible to rent to a relative if the latest is not part of the landlord’s tax household.
You must also invest in tense areas where the rental supply is lower than the demand. These are the Paris region, the major cities, and the majority of municipalities with more than 250,000 inhabitants (A bis, A, and B1 areas).
The Haute-Savoie department is particularly concerned by the Pinel Act. In 2022, 5 towns popular for their ski resorts have moved from B2 to A: Chamonix, Les Gets, La Clusaz, Megève and Morzine.
If you need help for your real estate project, feel free to contact us!