What is the Pinel device ?
The rental investment scheme “Pinel” is a device offering a tax reduction for the purchase of a rental housing in France.
Extended to the end of 2017, the rental investment assistance scheme allows an income tax reduction for the acquisition or construction of new housing, in return of a commitment to lease it naked for house use and at a lower price than the market for at least six years. It can be extended as an option to nine or twelve years.
The Pinel device takes up all the main lines of the old Duflot device. It makes it possible to acquire a new or old property that is the object of works to be transformed into new housing. The accommodation must be for rent, with an investment ceiling of € 300,000 per year and less than € 5,500 per square meter.
The tax reduction granted can range from 12% to 21% calculated on the cost price of the dwelling, according to the duration of commitment:
- 12% over 6 years,
- 18% over 9 years
- 21% over 12 years.
The renter’s resources and rent are capped to offer more rentals to the most modest households. The rule for calculating rent is that it is less than 20% of the prices charged for
the geographical area concerned.
The geographical areas concerned
The tax reduction applies to dwellings located in French municipalities where there is a significant imbalance between the supply and demand for rental housing, leading to difficulties in accessing this type of housing.
The geographical areas are divided according to the number of inhabitants:
- Zone A Bis: Paris and some communes of Ile de France.
- Zone A: Parisian agglomeration, Côte d’Azur (Hyères-Menton coastline) and French Genevois.
- Zone B1: agglomerations with more than 250,000 inhabitants, a large crown around Paris, a few other cities (Annecy, Bayonne, Chambéry, Cluses, La Rochelle, Saint-Malo), the French Riviera -mer, Corsica.
- Zone B2: remainder of Zone B, ie all agglomerations with more than 50,000 inhabitants, other frontier and coastal areas and the boundary of the Ile de France.
The 2017 rent ceilings
Rents are capped according to the scale below, but some cities may be subject to derogations in the event of a high level of rental stock.
Monthly rent ceilings in € / m²
- Zone A Bis: 16,83 €
- Zone A: 12,50 €
- Zone B1: 10,07 €
- Zone B2: 8.75 €
The pinel device concerns new or completed dwellings that meet the thermal characteristics and energy performance of the RT 2012 standard.
Those converted into dwelling and covering the above standards, old homes renovated in new, and finally, unhealthy housing and undergoing rehabilitation work will also benefit from this device.
The first lease of the home must be made within 12 months of the completion of the work or the acquisition.
Resource ceilings for tenants (2017)
Tenants must not exceed a reference tax income listed below according to the composition of their household.
|ZONE A BIS||ZONE A||ZONE B1||ZONE B2|
|Single person or couple + 1 child||72.737||66.699||48.596||43.737|
|Single person or couple + 2 children||86.843||79.893||58.666||52.800|
|Single person or couple + 3 children||103.326||94.579||69.014||62.113|
|Single person or couple + 4 children||116.268||106.431||77.778||70.000|
The capping of tax benefits
The tax reduction Pinel falls within the overall ceiling of tax niches of which the maximum is 10,000 € per year and per household tax.
If you buy a new apartment of 280,000 € in Paris for example and you agree to rent it for at least 9 consecutive years, you can deduct:
280.000 x 18% = 50.400 €
You will be able to deduct each year, for 9 years, € 5,600 of your tax.
Important Note :
The subscription of shares in SCPI also qualifies for the benefit, provided that 95% of this subscription is invested in units eligible for the device and leased under the conditions provided for therein. In this case, the tax reduction is equal to 12, 18 or 21% of 100% of the subscription amount, with a limit of € 300,000, spread over nine years.
It is possible, in the same year, both to subscribe for units of SCPI and to acquire up to 2 units per year entitling to the reduction of tax. In this case, the basis for calculating the tax reduction (shares of SCPI and housing directly acquired) is capped at 300,000 euros per year.
Cabinet Roche & Cie, Chartered Accountant in France
Specialist of non-residents’ real estate taxation