Investing in rental property allows you to benefit from tax exemption schemes and pay less taxes.
The Pinel law (replacing the previous Duflot law), applying to new housing or housing in the future state of completion, makes it possible to optimize its taxation but it is also possible to benefit from tax advantages in the rental investment of old real estate.
Tax exemption in new real estate
The device of the Pinel law applies to rental property investment new or in future state of completion: VEFA. This device replaces the Duflot law, and the previous device of the Scellier law.
The application of the Pinel law depends on the geographical location of the property. In fact, the accommodation must be located in one of the zones of the law (municipalities where rental demand is very strong). The property must be leased as a main residence for a minimum period of 6 years following the acquisition. Rents must respect a ceiling set by law between 8.69 euros and 16.83 euros per square meter.
The income of tenants must be below a certain limit.
The objective of the device is to facilitate access to housing for low-income households.
The owner who meets the conditions of the law will be able to benefit from a variable tax reduction depending on the rental period: 12% for a 6-year commitment and 18% for a 9-year commitment (possibility of extending the period up to 'at the age of 12). In the latter case, the reduction is increased to 21%.
Tax exemption in old real estate
Old real estate can also benefit from a tax exemption system: the Malraux law. This is a program to promote the renovation of dilapidated rental property.
The owners of old housing renovating their property to let them later benefit from a tax reduction of up to 30% of the amount of the work. The property must be rented for at least 6 years and be located in a specific geographical area.
The amount of work taken into account is limited to 100,000 euros and excludes certain expensive works such as demolition or reconstructio