To encourage rental investment, the State has put in place a legal tax exemption system called the Pinel law. It is a plan that offers attractive tax reduction benefits. However, you must meet certain conditions before you can benefit from it. Discover them through this article.
Have a new or recently renovated property
To benefit from the tax exemption under the Pinel law, your accommodation must meet certain criteria. Indeed, it is important to have a new property or a home that you have recently renovated. Here, several cases are acceptable. It can be a:
- new home you just bought;
- VEFA: housing sold in the future state of completion;
- old accommodation that is undergoing work to be transformed into new rental accommodation;
- real estate that you have built;
- housing being transformed to meet the characteristics of decency, etc.
In the event of a VEFA, the completion of the work must take place within thirty months of the date of signature of the original deed of acquisition. After construction, the property must be rented out within twelve months. If this is not the case, the investor risks not benefiting from the tax exemption under the Pinel law. For a simulation of the performance of your project, you can make use of this free excel pinel chart .
Respect the zones.
The Pinel law tax exemption system specifies that your accommodation must be located in given areas. First, you will see zone A bis which includes the city of Paris and 76 municipalities in the inner suburbs of Paris. Then, zone A which includes the metropolis of Île-de-France, Lille, Lyon, Côte d’Azur, Montpellier, Marseille and the French part of the city of Geneva. Finally, zone B1 contains all the agglomerations which have more than 250,000 inhabitants. It also contains the islands and departments which are not linked to the continent as well as the greater Parisian crown.
In reality, the Pinel system is demanding in these areas, because the number of rental accommodation is limited. However, the demand is very strong. Therefore, respecting these zones will make it possible to find the balance between supply and demand. In addition, zones such as B2 and C were withdrawn during the revision of the Pinel zones in 2018. This is why they are not included in the list.
Comply with the various caps
The first goal of the tax exemption system is to stimulate rental investments by promoting access to housing for households with lower incomes. To achieve this, it provides for certain conditions relating to tenants. Thus, rents must respect certain limits. As an investor, you are not allowed to set any rent for your tenants under Pinel law. Indeed, there is a rent ceiling that you must respect. The latter is calculated per square meter. Regarding the different zones A, A bis and B, the minimum prices per square meter are € 13.04; € 17.55 and € 10.51.
In addition, the resources of tenants are also taken into consideration. Indeed, it is impossible to rent your property if they receive an income exceeding a given ceiling. This ceiling also varies according to the zone and the marital status of the tenant.