Pinel Law operation: what are we talking about?

HomeTaxesPinel Law operation: what are we talking about?

The Pinel law is reserved only for rental investment.

It allows by the fact of buying a property which can be rented during a minimum period of 06 years, to benefit from a good tax reduction.

We will see in this article what the Pinel law is and how it works.

What is the Pinel law?

The Pinel law is a device dedicated to tax exemption to support rental investment.

This law was put in place in 2014, by Sylvia Pinel who was Minister of Housing.

It came into effect in 2015 with the finance law with retroactive effect until September 2014. Under this law, a French person who wishes to invest in new housing, can by the fact resort to this law to be able to benefit from a tax reduction.

Provisions in the current (2018) Finance Act have extended the application of the provisions of the Pinel Law until 2021.

It is essentially concentrated on the well determined zones, namely the zones A bis, A and B1 and this in accordance with the orientations of the housing policy which favors the targets of the aids. However, as far as B2 and C zones are concerned, they remain linked to governmental decisions. Indeed:

  • In the B2 zone, the government allows some flexibility to make certain transitions for investors.
  • In the C zone, it still remains eligible only under prefectural exemption until the end of 2017.
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How does the Pinel law work?

The Pinel law favors investment in new real estate for rental on the one hand, and in helping companies to obtain reductions on their taxes.

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The property subject to this law must be acquired before December 31, 2021. This housing must meet certain requirements, including:

  • The housing that is the subject of an acquisition in the form of sale in the future state of completion or after completion directly, where the investor will be the first owner.
  • The property must meet the BBC or Bâtiment à Basse Consommation standards,
  • Once acquired, it must be rented for a period of 9 years initially. This period can be reduced to 6 years or extended to 12 years depending on the situation.

This rental allows the owner to obtain a saving on his taxes. This reduction can be presented as follows:

  • 12 % in case the rental period is 6 years old (2 % per year).
  • 18 % in the case of 9 years old rental.
  • 21 % in the case of 12 years old.
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