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.

By purchasing a property that can be rented out for a minimum period of 06 years, it allows you to benefit from a good tax reduction.

In this article we will look at what the Pinel law is and how it works.

What is the Pinel law?

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

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

It came into force in 2015 with the finance law with retroactive effect to September 2014. Under this law, a French person who wishes to invest in new housing can use this law to benefit from a tax reduction.

The provisions of the current Finance Act (2018) have allowed the application of the provisions of the Pinel Act to be extended until 2021.

It is essentially concentrated on well-defined zones, namely zones A bis, A and B1, and this in accordance with the orientations of the housing policy which favours the targets of aid. However, the B2 and C zones are still subject to government decisions. Indeed :

  • In the B2 zone, the government allows some flexibility to make certain transitions for investors.
  • In zone C, it remains eligible only under prefectoral derogation until the end of 2017.

How does the Pinel law work?

The Pinel law promotes investment in new rental properties on the one hand, and in helping companies to obtain tax reductions on the other.

The property covered by this law must be acquired before 31 December 2021. The property must meet certain requirements, including

  • Housing that is acquired in the form of a 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 an initial period of 9 years. This period can be reduced to 6 years or extended to 12 years depending on the situation it faces.

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

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