Superb model apartments, overvalued tax advantages, charges ignored … The developers in Pinel law often embellish the situation! Do not let yourself be influenced and inform yourself on your side about the goods for sale, in particular via specialized sites. Remember that the location of the program and the quality of construction should be your main criteria. And ponder this advice given by all the good professionals: even if the accommodation in question is intended for the rental market, act as if it were your personal residence.
Selection of residence
Check the attractiveness of the neighborhood where the program will be built. It is never easy to choose a new home put up for sale in the future state of completion (Vefa), in other words on “plan”. Start by consulting specialized sites like Selogerneuf. com or Immoneuf.com which describe the projects of most promoters, national and regional. Also click on the sites of the promoters (Bouygues, Cogedim, Nexity, Kaufman & Broad, Emerige…), generally very precise. If one of the offers presented catches your attention, then go to the sales bubble where the model of the show apartment and the building permit file are located, which details all the technical aspects. Do not neglect to go out on the ground to verify if the area described as attractive by the seller really is. Ugly towers already seem to come out of the earth? Direction the town hall to examine the local urban plan (PLU) which sets the limits of area and height of buildings to be constructed.
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Tax benefit
No need to get started if it does not compensate for the rental reduction imposed by law. The Pinel law tax exemption formula is simple: you will get 12, 18 or 21% tax reduction on the purchase price – within the limit of 300,000 euros and 5,500 euros per square meter – depending on whether you rent your well six, nine or twelve years (knowing that the tax reduction will be spread over the rental period, and that it includes the ceiling of tax loopholes of 10,000 euros per year). That is a gain of up to 63,000 euros. But beware, this may not be enough to justify your purchase. You must compare the tax advantage granted with the loss of income that it can cause. Because, be aware, the rent ceilings required by law are 10 to 15% lower than those on the market. If this difference is not offset by the tax savings, you should not go for it.
Study of a new rental investment under the tax regime of the Pinel law
Conditions
Beware of buildings that are 100% dedicated to Pinel Law investors. The success of the operation requires first that the price of the good is not too high (not more than 30% above the old one of the district) in order to avoid any risk of loss of value on resale. Also check that you pay enough taxes: with an investment of 300,000 euros kept for twelve years, 6,000 euros paid each year to the tax authorities is a strict minimum. Think of leasing, of course, checking with local estate agents that demand exists, but don’t forget about resale. Thus, beware of studio and two-room programs entirely sold to investors, who are generally not very concerned about the good maintenance of the premises and will all resell at the same time: here too, beware of the risk of capital loss!
Counterparties
The accommodation must be leased continuously for six, nine or twelve years. Several bonds await the investor in Pinel. In addition to acquiring a satisfactory property with a high level of energy performance and located in a residential area with a tight rental market (read the box opposite to find out about the latest legislative developments concerning the eligible areas), rents are capped (the maximum applicable in 2020 varies from 10.44 to 17.43 euros per month per square meter, depending on the region), as are the income of tenants, even if, in practice, 70% of households are eligible for Pinel. Finally, the owner must rent his property continuously for six, nine or twelve years. It is possible for him to accommodate his parents or his children there, provided that they are not part of his fiscal household, and in compliance with the rent and income ceilings.
Questioning
Tax cuts will be canceled in the event of non-compliance with commitments. The Pinel law offers you a contract: you finance housing for those who lack it and, in exchange, you get tax relief. Also no question of cunning. If you cannot find a tenant in the twelve months following the completion of the residence or do not then respect the operating conditions of the system (rent increase, termination of the rental, early sale of the apartment …), not only you will no longer benefit from the tax advantage for the remaining commitment period, but you will see your tax increased by the amount of reductions obtained since the start of the operation. However, this principle includes exceptions, in the event of dismissal, serious disability or death of one of the members of the couple subject to joint taxation (therefore married or civil union). In the latter case, the survivor can request the resumption of the device for his benefit, including if he only inherits the usufruct of the acquired housing.
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Service packages: a turnkey purchasing formula that is not always advantageous
More and more marketers are offering customers complete packages. Whether it’s the selection of the property itself, the financing plan, rental management or insurance contracts, they promise to take care of everything. Attention, the formula, certainly very practical, sometimes proves to be not very profitable. Starting with the often prohibitive price of this multiservice organization. Example: 12 to 15% of the amount of rents are levied for management and insurance against unpaid rents. Without counting the 10% commission, maximum now set by law (see box), if the transaction goes through the salesperson of a sales network, whether it is a bank, an agent real estate or a wealth manager. As for the credit rate, it is not necessarily the most advantageous: it is better to take the time to compare the offer with those of specialized brokers (Cafpi, Loans, In & Fi, Meilleurtaux, Vousfinancer, etc.) and banking establishments in your city. .
Real return: sellers’ simulations rarely include all accrued liabilities
Achieve more than 7% yield in Pinel? Don’t dream! No doubt the sales representatives present you with a quantified simulation, but without going into details. Example: this 70 square meters paid 150,000 euros and rented 900 euros per month would guarantee a yield of 7.2%. False: not only has your seller included the tax benefit in his calculation, but he is pretending to ignore maintenance fees, property taxes, repairs, condominium fees and vacancy periods (count one month every the five years) during which you do not receive a penny. However, in new buildings, these expenses reduce the income collected by at least 15%. Rather, expect 4 to 5% net profitability, which is not bad enough, compared to risk-free financial products, such as life insurance, which earns two to three times less.
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Towards a more abundant and cheaper Pinel device for the buyer?
Narbonne, Béziers, Montauban, Pau … Excluded from the Pinel scheme since 2018, a number of medium-sized towns, where the supply of housing was deemed sufficient, could quickly become eligible again. They would thus join Angers and Poitiers (which obtained the government green light last year) and a few towns in Brittany (Brest, Lorient, Quimper, etc.), a region where an experiment aimed at revitalizing town centers is being carried out until the end of 2021. Another novelty, in force since last April: the commission paid to the sales network can no longer exceed 10% of the price of the property (it sometimes reached 12 to 15%). Finally, note that from 2021, Pinel will only be authorized in collective goods, and no longer in single-family homes.
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