last straight line to avoid the additional costs of Pinel +, Real Estate News/Analysis

2022 is the last year to take advantage of the full tax benefits of the Pinel rental investment scheme in its current version. The government has indeed decided to extend the Pinel until the end of 2024 while gradually reducing the rate of tax reduction for investments made from 2023.

Decreasing tax reduction rates from 2023

The current tax reduction rates of 12%, 18% and 21% (in mainland France) for rental commitments of 6, 9 and 12 years respectively, will thus be reduced in 2023 to 10.5%, 15% and 17 .5%, then in 2024 at 9%, 12% and 14%. During this transitional period, the current Pinel rates will nevertheless be maintained for housing located in a priority district of the city’s policy or for housing justifying both exemplary environmental standards and respecting several quality of use criteria. We will then speak of “Pinel+” for accommodation with a minimum surface area by type: 28m² for a T1, 45m² for a T2, 62m² for a T3, 79m² for a T4 and 96m² for a T5.

These minimum surfaces now seem fairly close to the average constructed surfaces, even if certain programs geared towards a clientele of rental investors favor more compact surfaces for better final profitability. Housing which must also systematically have a balcony and a double exposure from T3. On arrival, a few additional square meters can significantly increase the price of new apartments, especially in areas where the m² is around 5,000 € (2 m² difference corresponds to a price increase of 10,000 € even if the rent would be slightly increased).

Except for Pinel+ which will be more expensive

As for environmental standards, they will have to go further than the new RE2020 regulations that came into force for building permits filed since January 1, anticipating the standards for the milestone scheduled for 2025. Professionals from the Pôle Habitat de la Fédération Française du Bâtiment ( LCA-FFB) estimate that RE2020 already generates additional construction costs of at least 5% depending on geographical locations and installed equipment.

Individual houses (not eligible for Pinel) seem to be more affected by the additional costs linked to equipment such as the generalization of heat pumps instead of gas boilers, but the collective bears other additional costs, resulting in particular from the ever-increasing requirements of the local charters enacted by number of local authorities.

Upon arrival, these Pinel+ units will therefore cost investors more for identical rents on a comparable surface area (subject to the same ceilings as today). Without forgetting that the inflationary spiral concerns all new housing at the level of the surge in the cost of raw materials which does not seem to be about to stop.

4 more months to sign

In conclusion, if you have a Pinel project, it seems appropriate to take advantage of the current window by making a reservation without delay because the deed of sale must be signed before December 31, 2022 to benefit from the current version of the device. Pinel+ will then necessarily be less profitable even if we must not lose sight of the heritage dimension of such an investment. A Pinel+ will still be more qualitative and can therefore satisfy a project where the investor wishes to recover his apartment after the extinction of the tax advantage (6, 9 or 12 years of ownership) or pass it on.

Thinking about post-Pinel

From the outset, it is indeed necessary to think of this period when the Pinel no longer brings any tax advantage. Overall, three scenarios are possible: sell the accommodation, recover it for personal use or that of his family or continue to rent it. In the latter case, it will be necessary to wait for the renewal of the lease to be able to apply uncapped rents, the best solution here being to switch to furnished rental to benefit from new tax advantages linked to the depreciation of the property (which makes it possible to greatly reduce heavy taxation on property income).