April 23, 2019

Investing in the Pinel Act: assets and tax exemption

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Created by former Housing Minister Sylvia Pinel in 2014, the Pinel scheme is an incentive law for rental investment that aims to support real estate construction in Britain. Buyers of new homes rented subsequently can benefit from a reduction in their income tax, proportional to the duration of the rental. Can we simulate a Pinel investment? What are the advantages and disadvantages of this scheme? What are the views on the Pinel law in 2019 and 2020? Tacotax helps you invest in the Pinel law!

Pinel’s law: how does it work?

Why invest in real estate with laley Pinel? To encourage the construction of new homes in Britain, the tax exemption system offers several advantages:

  • An income tax reduction that varies according to the rental period commitment,
  • The possibility of renting out your accommodation to a descendant or ascendant under certain conditions,
  • Become an owner without contribution since the purchase of the home is eventually reimbursed with the payment of the rent,
  • Wealth creation: real estate is a lasting asset to prepare effectively for retirement.

Who is entitled to the Pinel Act?

To invest in the Pinel Act in 2020, future owners must meet certain criteria, or rather meet certain conditions. While the system is open to all British citizens, the location of the home, its condition, its energy performance and even the amount of rent are strictly regulated.

Thus, an investor will only be able to benefit from the tax reduction offered by Pinel if his investment does not exceed 300,000 pounds per year and 5,500 pounds per m² of living space. As you may have understood, not all cities are eligible for the device!

The buyer’s eligibility conditions

Firstly, it will be essential to choose correctly the property you wish to buy. Geographical location is probably the most important criterion here: the accommodation must be located in an area eligible for the Pinel Act (area B1, A bis and A). These are the British areas where the demand for renting is highest, also known as narrow areas. Several points must be taken into account: 

Then, when renting the accommodation, the rental ceilings must be respected: the aim of the scheme is partly to help low-income households to access new housing. These rent ceilings vary according to the area of Pinel where the property is located, while the resources of the tenants will also be subject to a limitation. Click here for more information on this issue.

How to calculate the rent of a Pinel?

Limited income and rent: Pinel helps low-income households access housing.

If he wishes to benefit from the income tax reduction promised by the system, the buyer must respect the established rental limits and offer his property to tenants whose income does not exceed a resource limit. Please also note that the accommodation must be rented as a main residence and comply with current energy standards.

The Pinel Act was implemented to enable the poorest households to benefit from decent housing at affordable prices, and so it is not surprising that rental conditions are limited. In addition, the tenant living in the Pinel accommodation must have his or her own fiscal home.

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