Investment and Pinel law: for whom, what and how?

When it comes to investing in real estate, there are a multitude of options available. The Pinel Law is one of the most popular choices, but it can seem complex and difficult to understand. This article aims to clarify what the Pinel Law is and how it can be used to make beneficial real estate investments.

And yes, the role of a chartered accountant is also to accompany you in your investment projects and to help you develop your assets in a safe and personalized way.

What is the Pinel law?

The Pinel law is a tax scheme created in 2014 to encourage investment in new rental property. Its objective is to stimulate the construction of new housing while offering tax benefits to investors. 

The info culture G The device was named after the Minister of Housing at the time, Sylvia Pinel.

This is the'article 5 of the finance law for 2015 which introduced this rental investment scheme called Pinel.

The 2021 budget law, and more specifically its section 168, has modified the system as of January 1, 2023.

Since that date, and for the years 2023 and 2024, the device is available in two ways: the classic Pinel and the Pinel + .

• Classic Pinel = decreasing tax reduction rates
• Pinel +: maintenance of previous rates, according to neighborhood criteria and energy and quality criteria

On the way to Pinel +

In order to benefit from Pinel+, the housing in which the buyer invests must meet specific criteria: 

1. To reach a level of energy performance higher than the regulations in force. This is the decree No. 2022-384 of March 17, 2022 that governs Pinel+. Energy performance is governed by the Environmental regulation - RE 2020.
2. Offer a high level of quality and comfort as described in article 3 of the same decree mentioned above.

This includes: 

• The minimum living areas are 28 m² for a T1, 45 m² for a T2, 62 m² for a T3, 79 m² for a T4, 96 m² for a T5;
• The existence of private outdoor spaces for minimum areas of 3 m² for a T1 or T2, 5 m² for a T3, 7 m² for a T4, 9 m² for a T5;
• Two different orientations for the T3 units and more.

Extra info: 

• The decree stipulates that the conditions are more flexible for building permit applications filed before January 1, 2022, as well as for dwellings acquired in a transaction other than construction. 
• Homes acquired or built in 2024 will have to obtain a class A energy performance diagnosis.

The conditions of eligibility for Pinel and Pinel +

In order to benefit from the Pinel law, the investor must respect certain conditions:

• The property must be located in an area eligible for the Pinel scheme. These zones are defined in the texts and concern territories where the demand for housing is strong.
• The property must be rented bare as a primary residence for a minimum period of 6 years. 
• The rent must not exceed a certain ceiling, which depends on the zone where the property is located. 
• The investor must not exceed a ceiling of resources, which varies according to the zone where the property is located and the composition of the tax household of the investor. These income ceilings are set out in article 2 terdecies D of appendix 3 of the General Tax Code.

The tax benefits of the Pinel law

The main advantage of the Pinel law is a income tax reduction up to 21% of the purchase price of the property.

The tax benefit offered by the Pinel law increases according to the rental period to which the owner commits, which can be 6 or 9 years and can be extended to 12 years. 

This tax reduction is valid for the entire duration of the rental commitment, but is subject to a limit of 300,000 euros in total and 5,500 euros per square meter.

For investments made until December 31, 2022, the reduction rates are as follows: 

• 12% of the purchase price of the property over six years, 
• 18% over nine years with an additional reduction if the commitment is extended. 

Since January 1, 2023, the rates are modified in a degressive manner according to the duration of the rental commitment: 

• 10.5%, 15%, and 17.5% for six years 
• 9%, 12%, and 14% for a nine-year term

Please note: this degressivity does not apply to housing that meets the new criteria to benefit from the Pinel +. 

In the French overseas territories and departments, the reduction rates are higher, with respective rates of : 

• 21.5%, 26%, and 28.5% for a six-year term
• 20%, 23%, and 25% for a nine-year term

Good to know Housing acquired or built in 2024 will have to have an energy performance diagnosis of class A.

The Pinel law: an opportunity not to be missed!

The Pinel law is an interesting opportunity for investors who wish to invest in new rental property while benefiting from significant tax advantages. Although it has strict eligibility requirements, it can be profitable in the long term for investors who respect these conditions. 

If you are interested in the Pinel law, Viseeon's chartered accountants are at your disposal. After a personalized assessment, they will advise you according to your profile and your objectives.

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