Raised in 2023 before an even more drastic drop next year, the Pinel system is also suffering from the rise in new prices. But under certain conditions, investors can still make good deals.
If you are looking for a way to reduce your income tax in 2023, perhaps you have thought of an investment in Pinel. The problem is that while the finance law for 2021 maintained the Pinel system by the end of 2024, it also implemented a gradual reduction in tax reduction rates over two years, starting in 2023.
Until the end of 2022, the rate of the tax reduction could range from 12% to 21% of the amount of the acquisition depending on the duration of the commitment (from 6 to 12 years). But since January 1, 2023, investors only profit from 10.5%, 15% and 17.5% reduction, depending on the duration of the rental. And the decline will be reinforced in 2024, since the tax reductions will no longer be able to exceed 9%, 12% and 14%, depending on the rental commitment. That is a drop of a third in two years.
What is the Pinel device?
The Pinel rental investment scheme is a tax exemption solution that allows you to benefit from a tax reduction in the event of the purchase or construction of a new home in a collective housing building, subject to making a commitment rent it for a number of years. The investor must respect conditions as to the location of the property, the resources of his tenant and the rent he sets, in particular. This advantage is limited to a purchase of 300,000 euros in total and 5,500 euros per m2 of living space. The tax reduction is a maximum of 6,000 euros per year.
Put the property purchased back at the heart of the project
Faced with this government decision, the question of Pinel’s interest arises. Especially since potential investors face other difficulties, as Manuel Ravier, co-founder of the Investissement-locatif.com site, reminds us: Not only do we have a lower tax deduction rate, but we also face sharply rising credit ratesnot to mention the prices of new which are also increasing.
Indeed, the average for a loan over 20 years was 2.50% in January 2023 (compared to around 1% a year ago). And new property prices are not falling: between November 2021 and November 2022, the average price per m2 in municipalities with more than 45,000 inhabitants rose from 5,195 to 5,495 euros, an increase of 5.7% over a year. Two factors which, combined with the reduction in the tax deduction, can have an impact on the choice to make an investment in Pinel.
But the program is nonetheless interesting in some cases. In 2023, I always recommend doing a Pinel, before 2024 when there will be a real deterioration, assures Stphane Van Huffel, founder of Netinvestment. But you have to ask yourself the right question: is doing a Pinel in 2023, despite the degraded conditions, consistent for the performance of my operation to be good?
Today, you have to think about putting the product at the heart of the investment, developed by Stéphane Van Huffel. The location, the fact of buying at the right price… More than ever, it is necessary to consider the rental profitability of the product, but also its good prospect of resale. The founder of Netinvestment also advises turning to secondary cities, where the price per m2 has not yet matured, even if it means abandoning the more popular cities like Bordeaux or Paris.
Rental real estate: beware of overly attractive promises of gain with Pinel
Real estate credit: find out the lowest rates for your project
Between old with work or Pinel +, a choice to make
Other investors are choosing to turn to the old, according to Manuel Ravier: We see that investments in new buildings are less sought after, people are turning more to investment in old buildings with renovations , even excluding Pinel. It can also allow you to buy cheaper than new.to benefit from certain tax reductions (like the doubling of the land deficit or the Denormandie system), but also a better location compared to a new Pinel-type program. Manuel Ravier therefore advises to make a good calculation of what each type of investment can cost and bring in.
The fact remains that some investors are still benefiting from the tax reduction at the rates of 2022. Renamed Pinel +, this device, valid for the moment until the end of 2024, is only intended for very specific housing. This is the case, for example, if the latter are located in a priority district or if they comply with a level of quality higher than the regulations.
To claim this name, housing must demonstrate exemplary environmental standards, compliant with environmental regulations RE2020. For example, housing acquired or built in 2024 will have to present a class A energy performance diagnosis.
Real estate: can you expect lower prices in 2023?