The old Pinel scheme

The Pinel law replaced the Duflot scheme on 1 September 2014. Linked to a rental investment in new and old properties, it provides a tax reduction of 12%, 18% or 21%, depending on the rental period which can range from 6 to 12 years, with a new possibility: that of being able to rent the property to an ascendant or a descendant. You want to learn more about the old Pinel scheme? This article is for you.

The old Pinel scheme is granted upon the acquisition of a property in a state of disrepair. Certain criteria must be respected in order to fully benefit from this law. To qualify for the advantages of the Pinel scheme, the property must be renovated, or if it is a building for non-residential use, it must be rehabilitated and this under the supervision of a building expert. At the end of the works, the property must meet the same technical standards as new-build housing.

Why choose the old Pinel scheme? For the tax savings it provides. It is financially attractive for investors with a marginal tax band of 30% or below.

Which properties are eligible for the Pinel scheme? New-build properties, properties in future completed state (VEFA), properties under construction, old properties undergoing works to be converted into new-build housing, properties undergoing rehabilitation works, non-residential premises undergoing conversion works into housing. Also, indecent buildings that do not meet 4 out of 15 decency criteria and those that do not meet 6 out of 12 technical performance criteria.

How to benefit from a tax reduction? The property must have been acquired since 1 September 2014. Once renovated, the property must be let unfurnished for a period of 6, 9 or 12 years, in order to benefit from a tax reduction of 12, 18 or 21%. This is a tax reduction on the purchase price of the property with a letting commitment. The deduction is calculated by taking the purchase price of the property to which is added the amount of the works cost. The investment ceiling is £300,000, the deduction can reach £36,000 over six years, £54,000 over nine years, or £63,000 over twelve years. The tenant must meet certain income conditions and must use the property as their primary residence.

How to benefit from the old Pinel Act? The property must be in a state of advanced disrepair. Before starting works, a tax administration agent must declare the property uninhabitable as is in order to be able to commence works, and an independent expert (architects, technical surveyors, consulting engineers in the construction field, expert surveyors and construction economists) will need to visit the property to carry out a technical assessment. Before works, the property must not meet the decency characteristics set out in article 6 of Act No. 89-462 of 6 July 1989, and the technical performance criteria of Act No. 86-1290 of 23 December 1986. You must also have completed a document provided by the tax office, which is the “model certificate describing the condition of the property before and after works”, by an independent construction expert before and after the rehabilitation works. At the end of the project, the rehabilitation must be close to that of a new-build property and it must meet high energy performance standards and have the High Energy Performance labels or BBC rénovation 2009.

How long do you have to carry out works after authorisation from the tax administration? After purchasing the property, you have two years to carry out rehabilitation works and to convert professional premises into housing: “Completion of works must occur no later than 31 December of the second year following that of the acquisition of the premises or property concerned.”