Pinel Law: Can you take advantage of the tax reduction on the purchase of a new home?

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The Pinel law is a tax system introduced by the 2015 and 2021 finance law. It offers the possibility of benefiting from an income tax reduction for a rental investment. To do this, you must follow several rules that we detail here.

First of all, you must buy a new home or one in a future state of completion (VEFA) before December 31 of the current year. Then, you must commit to renting the bare accommodation for a minimum of six years, as your main residence. The property must be rented within 12 months of its completion.

Please note, when you sign the deed of purchase, the accommodation must be built within 30 months, whether off-plan or new accommodation built by an individual.

The Pinel tax benefit begins on the date of completion of the work. The tax reduction begins in the year of delivery of the property, regardless of the month. Finally, the total amount of the investment must not exceed €300,000 per year, whether for one or two properties, with a ceiling of €5,500 per m².

The tax reduction is significant. It can go up to €63,000 over 12 years.

In detail, an individual benefits from a reduction in their income tax of 12% over six years, or 2% per year of the total purchase price of the home. If the commitment period is nine years, the rate increases to 18%. It increases to 21% for a period of twelve years. For an overseas investment, the tax reduction can go up to 32%. In 2023, the rates are reduced. They will increase to 10.5% over six years, 15% over nine years and 17.5% over twelve years. In 2024, tax exemption will increase to 9% over six years, 12% over nine years and 14% over twelve years.

The Pinel system was set up to promote access to rental for low-income households, but who cannot claim social housing. In addition to the rent ceiling, the resources of the tenants must not exceed certain limits. This again depends on the areas of residence. This ranges from €38,377 for a single person in zones A bis and A, to €28,152 in zones B2 and C. For a couple, it ranges from €57,357 to €37 €594.

Finally, be aware that to benefit in 2023 and 2024 from non-reduced tax reduction rates, your accommodation must meet quality and energy and environmental performance requirements. A T2 must have a minimum area of ​​45 m² plus 3 m² for exteriors. For a 3 or more rooms, it must have an exterior opening on at least two different facades.