Roche & Cie

What will become of the Pinel Law in 2018?

31 Aug 2017

Will the Pinel Law be abolished in 2018? The Minister of Territorial Cohesion, Jacques Mézard, tried to provide an answer.

At the end of July, Jacques Mézard, at the microphone of RTL, said that a “brutal shutdown of the system” was not on the agenda, suggesting that changes would be made to the current fiscal mechanism. The future of the Pinel Act? Professionals are now trying to draw it.

Does the government want to end 30 years of tax exemption?

For 30 years, the Scellier law, the Duflot law and today the Pinel law (to cite the best known), have constantly attracted investors. With an end initially scheduled for December 31, 2016, the Pinel Act was extended by the previous government until December 31, 2017 because of its success with individuals.

But the current government seems to want to reform this legislation. The main reason for this will be the cost of its operation. For the year 2017 alone, tax exemption schemes resulted in expenditures of more than one billion euros for the State.

The government is now faced with a dilemma: despite the cost of the Pinel law, it is undeniable that it has brought investors back to the new property market, boosting one of France’s major economic engines and creating jobs. The FPI (Federation of Property Developers) asserts that one sale out of two is currently done through the Pinel law on the new real estate market. Where is the compromise between satisfied investors and savings?

A better framed device

If the government is still groping about the way in which the Pinel Act will be redrafted, its will is not to suppress it altogether. At the RTL microphone, the Minister of Territorial Cohesion said at the end of July: “If we stop the Pinel system abruptly, we will have a reduction in housing constructions, so we must find a balanced solution, knowing that the Pinel device Also generates tax revenue “. Changes yes, but not deletion. Real estate professionals and investors can therefore, in part, reassure themselves. Faced with the uncertainties that remain, the actors of the sector expect a Pinel device better framed, less permissive. This means very concretely that the Pinel law could be refocused, applied only in (very) tense areas. These areas, where housing supply is inferior to demand, generally provide a good return for investors.

This refocusing seems nowadays necessary to avoid the drifts. Certain relaxed communes, located in zone B2 or C, are in fact eligible for the Pinel law on derogation. An investor who does not properly study the rental market before making his investment would therefore risk taking financial risks in these localities. Relaxed area very often means little dynamic rental demand and, by extension, housing that stays vacant too long and / or too often.

A narrow Pinel law would thus allow investors to maximize the chances of making their rental investment profitable.

Source: La Vie Immo

Cabinet Roche & Cie, English speaking accountant in Lyon, France.
Specialist in Real-Estate and Non-resident taxation.