2023 - Should we open a PEL in 2023?

The housing savings plan (PEL) is a bank savings product which allows you to invest your money, at a rate fixed at subscription, for a period of 4 to 10 years. Under conditions, it also gives access to a loan to finance a real estate purchase at an interest rate known in advance. But is it really interesting to open a housing savings plan (PEL) in 2023?

How does the ELP work?

THE PEL is a regulated savings account, which can be opened by any natural person, even a minor, within the limit of one PEL per person and two PEL per tax household. You must pay a minimum of €225 when opening the plan, then make regular payments of at least €540 per year (i.e. for example: €45 per month). The maximum amount that can be paid into a PEL is €61,200, excluding capitalization of interest.

The PEL has a minimum duration of 4 years, during which no withdrawal is possible without leading to its closure. It has a maximum duration of 10 years, beyond which no further payments are authorized, however the plan continues to produce interest for 5 years before being automatically transformed into a passbook account. At the end of the plan, the holder can choose between several options: close the plan and recover their savings and interest, request a housing savings loan to finance a real estate project, or transfer their savings to a savings account.

What is the remuneration rate for a PEL?

The PEL remuneration rate is fixed when the plan is opened and guaranteed throughout its lifespan. It therefore depends on the opening date of the plan. On January 1, 2023, the PEL rate increased to 2% gross. This rate only applies to new plans opened from this date. Plans opened before January 1, 2023 retain their initial rate, which varies between 1% and 3.27% depending on the period.

THE PEL rate is expressed in gross, which means that social security contributions (17.2%) and income tax (12.8%) must be deducted to obtain the net rate. PELs subscribed since 1^er January 2018 are taxable from the first year of the plan and subject to social security contributions. However, PEL interest subscribed before 1^er January 2018 are only taxable from the 12th year of the plan, that is to say they are exempt from income tax, but not from social security contributions.

What is the taxation of a PEL?

The taxation of the PEL depends on its opening date and its duration. The interest on the PEL is subject to social security contributions (17.2%) from the first year. They are also subject to income tax (12.8%) from the first year for PELs subscribed from 1^er January 2018 and from the 12th year for PELs subscribed before this date. The holder can, however, opt for the progressive income tax scale if it is more advantageous for him.

In addition, a PEL opened before January 1, 2018 can benefit from a State bonus if the holder requests a home savings loan of a minimum amount of €5,000. The State bonus corresponds to part of the interest acquired on the plan, up to €1,000 (or €1,525 if the loan finances energy performance work). The state bonus is subject to social security contributions but not to income tax.

Should we open a PEL in 2023?

Opening a PEL in 2023 can be interesting if you have a medium or long term real estate project. In fact, the PEL allows you to benefit from a guaranteed remuneration rate of 2% gross. In addition, the PEL gives you access to a home savings loan at a rate of 3.20%, which can be advantageous if market rates are higher at the time of your loan.

However, the ELP also has disadvantages. You should know that the PEL is an inflexible investment, which requires regular payments and which does not allow you to withdraw your money before 4 years without penalties. In addition, the PEL is subject to fairly heavy taxation, which reduces its net return. Finally, the PEL is not suitable if you need your savings in the short term or if you want to finance a project other than real estate.

Conclusion

The PEL is a savings product which can be useful for preparing a real estate project. It offers a guaranteed remuneration rate of 2% gross for plans opened from January 1, 2023, as well as a favorable loan rate of 3.20%. However, the PEL is also a restrictive investment, which requires regular payments and which does not allow you to freely dispose of your savings. It is therefore important to think carefully before opening a PEL and to compare possible alternatives.

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