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Money Matters and Legal / In Law

Rental investment: The Pinel device extended until end 2017

Immobilier Neuf

In good news for investors in new built property, the “Pinel” tax benefit has been extended by an extra year.

François Hollande has announced the extension of the Pinel device until end 31st December 2017. The tax exemption device was initially planned to be discontinued at the end of this year, but investors will now benefit from an extra year to take advantage of the fiscal device when purchasing new built property to rent out.

Named after former Housing Minister Sylvia Pinel, the device provides for fiscal advantages for investors who buy and rent out property in areas deemed “tight,” i.e: where the demand for property is high.

Owners of new build properties who rent their properties out benefit from reduced taxation. Rates of tax reduction increase proportionally to the length of the commitment period to renting the property. Investors renting out their property for 6 years are granted a 12% tax rebate, an 18% reduction for 9 years and 21% for 12 years.

Further tax exemptions apply to those renting property to their ascendants or descendants (parents or children), promoting intergenerational support and boosting access to affordable housing for young people and retirees.

Originally planned for just a year ­— in order to boost the then-struggling construction sector — the device will now be extended till end 2017.

When revealing this decision at the beginning of April, in the company of the new Housing Minister Emmanuelle Cosse, President Hollande prefaced his announcement by stating that this device “has worked, is working and will continue to work.”

Indeed, according to the Nouvel Obs, sales of new built property jumped by 44% last year, with this surge credited to the Pinel device. It has also been hailed as a major factor in the construction sector’s renewed activity after eight years of crisis.

Professionals in the construction sector have unsurprisingly welcomed this announcement, with the President of the Federation of Property Developers (FPI) Alexandra François Cuxac saying: “This measure will help launch new housing operations to meet our citizens’ needs.”

Photo credit: Public Domain Images / Charles Rondeau

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