Why and how to invest in real estate thanks to Pinel’s law?

Pinel’s law is a real asset for investors who want to invest in rent. It allows you to rent real estate for a maximum of 12 years with tax benefits. To fully understand this law and its benefits, let’s summarize this investment.

Why and how to invest in real estate thanks to Pinel's law?  /iStock.com - Lucky7trader

Why and how to invest in real estate thanks to Pinel’s law? /iStock.com – Lucky7trader

What is Pinel’s law?

Pinel’s law is a mechanism introduced by the government to encourage the French to invest in real estate. This law is to provide certain tax benefits to people who want to invest in real estate. But to take advantage of these tax benefits, you must undertake to lease these goods in accordance with Pinel’s law for more than six years.

How does it work?

To take advantage of Pinel’s law, simply integrate the device when buying a property. It should be noted that this law applies only to new housing (or sale in a state of future completion called VEFA) and that the future owner / landlord should explore the possibility of benefiting from it in each case, in particular by limiting rents and exploring the resources of future tenants. … and why not you?

You need to know that Pinel’s law remains a tax niche and that you must meet certain criteria in order to access it. To benefit from this, here are some things to keep in mind: You need to invest in real estate in France. Only certain cities / towns are entitled to this law. They must be located in the so-called zones B1, A and A bis. Ownership should not exceed a certain amount. Indeed, the investment ceiling is € 300,000 / year, ie € 5,500 / m2 per investment. The rent should be lower than the market price. For example, in zone B1 it is estimated at 10.51 euros / m2. Etc.

Term of lease of real estate Pinel

To take advantage of Pinel’s tax benefits, it’s best to invest in real estate that will be leased out for the long term. Indeed, in order to benefit from tax benefits, this housing must be rented for at least 6 years from the date of completion. This period has been extended to 9 years for difficult areas and up to 12 years for high-intensity areas. Thus, an investor who buys a home for rent for less than 6 years will not be able to take advantage of tax benefits under the Pinel Act.

The rate of tax benefits under Pinel’s law

Thus, in order to benefit from Pinel’s tax credit, investors must meet different criteria. Once you have integrated the device, you should know that this rate of tax relief can not exceed 21% of the price of housing. In more detail and by the end of 2022 the rate is 12% for rent for 6 years, 18% for 9 years and 21% for 12 years. In 2023, these rates will decrease: 10.5% (6 years), 15% (9 years) and 17.5% (12 years).

Advantages of Pinel’s law

Investing in Pinel Law is an interesting investment because it allows you to: Optimize your real estate assets and taxes, as well as save money through tax benefits Maximize the return on your investment by investing your money in real estate. To release your investment in rent, using the rate of tax relief from the first invested euro. To take advantage of the tax rate, which varies depending on the duration of the investment. Buy real estate without payment, because the purchase of real estate through a bank loan depends on the rent collected.