What’s new for the PINEL law in 2021?

You’re not dreaming, despite the economic crisis caused by COVID-19, the government has still managed to deprive privateindividuals of valuable assistance in buying a home. As a result, this measure also deprives developers of as many projects. Colline Groupe has decided to explain all this to you.

What is the PINEL law?

It is an investment scheme, set up by Minister Sylvia PINEL, allowing owners of new or renovated homes, located in specific areas, to benefit from a reduction in income tax. This scheme, initially scheduled to run from September 1, 2014 to December 31, 2021, has been extended until 2024.

How to benefit from it?

To benefit from this tax reduction, the property purchased new, in the future state of completion or rehabilitated must :

Be in an area classified as “tense” (A, Abis, B) or in an area covered by a revitalization contract ;
Be rented unfurnished (unfurnished);
Be rented for use as a main dwelling for 6, 9 or 12 years and at a maximum rate of less than 20% of the market price;
Be rented to a tenant with an income level that does not exceed a certain ceiling;
Comply with an overall energy performance level.

Finally, the property may be rented to an ascendant or descendant of the owner provided that he or she is not a member of his or her tax household.

Concretely, what are the advantages for an individual?

It is a reduction of income tax spread over the entire duration of the lease (6, 9 or 12 years). It depends on the options chosen by the owner. To give you an idea, the reduction reaches 12% of the purchase price for 6 years of commitment, 18% for 9 years and finally 21% for 12 years, but it reaches 23, 29 or 32% in the overseas collectivities and departments.

These percentages are calculated up to a limit of €300,000 or €5,500/m2 per dwelling. It is possible to benefit from this system for 2 dwellings per year. This reduction is included in the €10,000 (or €18,000 for overseas investments) of the overall ceiling of tax benefits.

By supporting the rental investment, this process allows modest families to find a newly built home at a more affordable price.

What are the changes for 2021?

Even if the scheme was still in its period of validity (scheduled to run until December 31, 2021) Madame Minister Emmanuelle Wargon, in charge of housing, has nevertheless decided to change the rules: since January 1, 2021, it is no longer possible to benefit from the tax exemption process for houses. Nothing changes as far as collective housing is concerned.

However, this measure does not apply to projects already underway. Colline Groupe still has a few opportunities for houses that can be tax-exempted, so don’t hesitate to take advantage of it!

Need more information?

Colline Groupe’s advisors can help you in your investment process, don’t hesitate to contact us.

Documentary base:

Official texts from this site: https://www.cohesion-territoires.gouv.fr/dispositif-pinel

The areas concerned here: https://www.ecologie.gouv.fr/zonage-b-c 

The table of maximum revenues for tenants: https://www.cohesion-territoires.gouv.fr/sites/default/files/2020-07/20200309%20%20Remont%C3%A9es%20loyers%20modul%C3%A9s%20Pinel.pdf 

More precision for the reductions planned until 2024: https://www.service-public.fr/particuliers/actualites/A14583