Initially, the Pinel Law, in its current form, was to give way to the 1er January 2023 to the Pinel + system, with lower tax reduction rates than those currently practiced. But good news for rental investors, the current system has just benefited from a 3-month extension. We explain to you!
Summary
Extension of the Pinel law at full rate until April 1, 2023
The official announcement came from the French Senate. As every year, parliamentarians have considered the draft budget law for the new year.
During their work for the year 2023, they became interested in the Pinel device. Our representatives then decided to maintain the tax reductions currently granted to investors for an additional period of three months, i.e. until 1er April 2023.
Immediate consequence of this news: all those who intended to make a rental investment in one of the cities eligible for the Pinel scheme still have some time to sign their deed of sale before the notary.
They will thus be able to continue to benefit from the maximum tax reductions of:
- 12% for a rental commitment over 6 years;
- 18% for 9 years of rental;
- 21% for 12 years of rental.
For more information on the Pinel Law in its current wording, do not hesitate to contact a real estate investment adviser.
What are the rates for the Pinel + device?
From April 2023, tax cuts under the Pinel Law will be reduced. The reduction will be done in two stages:
For purchases between April 1, 2023 and December 31, 2023
For any real estate purchase under the Pinel law made between 1er April 2023 and on December 31, 2023, the tax reductions change to:
- 10.5% for a 6-year rental commitment;
- 15% for a lease over 9 years;
- 17.5% for a lease over 12 years.
For real estate investments between January 1, 2024 and December 31, 2024
The tax reductions will, once again, be compressed for all real estate purchases between 1er January 2024 and December 31, 2024. They respectively change to:
- 9% for leases over 6 years;
- 12% for a lease over 9 years;
- 14% for 12 years of rental.
End of the classic Pinel system in 2024
The Pinel Law in its current form will completely expire on December 31, 2023. Instead, the authorities announce the Pinel + device. To have access to it, you must opt for accommodation located in a priority district according to the city’s policy or defined by the public authorities as « precursors for the application of environmental regulations and which respect certain criteria of quality of use » .
This new device incorporates the main foundations and advantages of the classic version. But he incorporates more drastic conditions on the comfort of housing and their environmental impact.
The comfort criteria of the Pinel Law +
To benefit from the exemptions provided for by the Pinel + Law, the accommodation must offer a minimum living area of:
- 28 m² for a T1;
- 45 m² for a T2;
- 60 m² for a T3;
- 79 m² for a T4;
- 96 m² for a T5.
Moreover, the properties must have a private outdoor space and benefit from a double exposure for maximum brightness inside. More specifically, dwellings with three or more rooms must have two different orientations.
Environmental criteria
To benefit from Pinel Plus, new homes acquired in 2023 must comply with RE2020 milestone 2025 standards. This regulation, which succeeds RT 2012, defines stricter standards to make housing less energy-consuming.
In addition to meeting this first criterion, new homes acquired in 2024 must achieve class A of the Energy Performance Diagnosis (ECD).
Cohabitation between Pinel Plus and classic Pinel over 2 years
The Pinel and Pinel + devices will coexist during the years 2023 and 2024. In a new program, we can therefore find accommodation eligible for classic Pinel and others for Pinel Plus.
Finally, note that, despite the official announcement of extension of the Pinel law, the bill has not yet been voted by the assembly. Therefore, the extension of the current tax exemption rates is not yet official. We must therefore wait until December to find out if the rate reduction will actually take effect from 1er April 2023 or rather from the 1er January 2023.
Read also: Why and how to establish a good real estate financing plan for the bank?
