What is France’s LOI PINEL? Tax Advantages on Rental Investments.

The Loi Pinel was introduced in September 2014 by Housing Minister Sylvia Pinel as a way to encourage new-build investments and increase the supply of rental housing to middle-income households. Essentially, it’s a tax reduction applied for investors who purchase or construct a new build property and commit to renting it out for a minimum of six years.

There are several conditions to be met, including the property itself (only new build, energy-efficient buildings are eligible), its location (the property must be in an eligible area, i.e., an area in which such rental properties are in short demand), and the tenants’ taxable household income (which must be under the annual threshold). The overall aim is to increase housing construction in high-demand areas while simultaneously increasing rental options for middle-income households who may struggle within the current property market yet still earn too much to qualify for social housing.

Initially, the Loi Pinel applied only to properties built between September 2014 and December 2017, but it was later extended to December 2024 for zones A, A bis, and B1. However, there have been some changes to the law since 2022. The previous B2 and C zones are now no longer eligible, and the tax benefits are being progressively reduced for eligible properties built between 2022 and 2024 (more on that below).

If you are purchasing or constructing a new build, opting to rent out the property under the Loi Pinel comes with considerable tax advantages. In essence, it means that the state will pay between 12% and 21% of the price of the property (up to €52,500) in the form of tax reductions over a period of up to 12 years.

Although you must commit to renting out the property for a fixed period; after the period has lapsed, you are free to do as you please with the property, whether that means selling and taking advantage of any price increase or continuing to rent out your property (without the former tax advantages or restrictions). You will, of course, also benefit from the rental yield of your property during the entire rental period.

Another advantage is that the Loi Pinel can apply to family rentals, providing the tenant is not part of your fiscal household, so you could rent the property to a non-dependent child or other family member and still benefit from the tax advantages.

So, how does it work? Under the Loi Pinel, you must commit to renting out your property for 6, 9, or 12 years. Depending on the duration chosen, the corresponding tax reduction will be applied to your annual tax return over the duration of the rental period. Note that due to the extension of the law, these reductions are being progressively decreased over the coming years – the table below shows the tax reductions for 2022 – 2024.

There are several criteria that must be met in order to qualify for the Loi Pinel tax reductions:

• You must be fiscally resident in France (see our guide Understanding French Tax- Are You Tax Resident in France?).
• The property must have been purchased or constructed between September 1, 2014, and December 31, 2024.
• The property must be located in one of three eligible zones:
  • Zone A bis: Paris and immediate periphery
  • Zone A: Large cities with more than 250 000 inhabitants
  • Zone B1: Large cities between 150 000 and 250 000 inhabitants
• The property must comply with BBC 2005 or RT 2012 energy and thermal performance standards.
• The property must be rented for a minimum period of 6, 9, or 12 years.

Note that the Loi Pinel applies can only apply to a maximum total investment of €300,000 per year and a ceiling of €5,500/m² – this can be split across a maximum of two properties.

Individuals also cannot exceed the annual threshold for tax benefits in France, which is set at €10,000 (more on that here).

There are also strict criteria regarding renting your property during the 6-, 9-, or 12-year period:

• The property must comply with the rent thresholds set for the location (aimed to keep rents affordable in competitive areas).
• The tenant must have an annual taxable income less than the threshold (see below).
• The tenant must not be part of the property owner’s fiscal household – however, they may be a member of the owner’s family.

Read the official rules on the Loi Pinel here.

If you are looking to rent a property in France, opting to rent a property under the Loi Pinel rental scheme can have advantages too. By their nature, Loi Pinel properties are located in areas with high rental demand and have capped rental prices, making them an affordable option for middle-income families. With a Loi Pinel property, you will also have all the advantages of a new build property that meets the latest energy efficiency standards.

Can you rent a Loi Pinel property?

Whether or not you will be able to rent a house or apartment under the Loi Pinel depends entirely on your annual taxable income or “revenu fiscal de référence”. In order to rent a Loi Pinel property, your household’s taxable income must be less than the thresholds laid out in the table below. Higher-income earners will not be able to rent a Loi Pinel property, so it’s a good idea to familiarise yourself with the thresholds if you are property hunting in France.

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