Is it possible to sell a Pinel home?
Table of contents
- What is a Pinel property?
- What are the conditions for resale?
- Can we sell a Pinel property before 9 years?
- What is the tax treatment of reselling a Pinel property?
- How do you sell a property under the Pinel law if there is a tenant?
- Is the owner obliged to resell his Pinel property?
- What are the costs of selling a property under the Pinel law?
It is possible to sell a Pinel property under certain conditions. The Pinel tax exemption scheme offers a number of advantages, based on the investor's commitment to rent out the property for a certain period of time.
Thus, it is possible to sell a property under the Pinel law subject to the real estate tax exemption scheme. To benefit from this advantage, the owner must commit to renting out the property for a period of 6, 9 or 12 years.
What is a Pinel property?
The Pinel law offers 3 proposals to owners: a 6 year rental commitment (12% tax reduction), a 9 year rental commitment (18% tax reduction) or a 12 year rental commitment for a 21% tax reduction.
The Pinel law allows you to rent your property to a member of your family as long as they are not directly dependent on the same tax household.
However, the Pinel law requires that owners respect certain conditions:
- The property must be located in geographical areas where rental demand is high, the so-called "tense" areas such as Paris.
- This no longer applies to houses from 1 January 2021.
- This scheme supports property projects and investments with a maximum value of 300,000 euros per year, with an estimated ceiling of 5,500 euros/m².
A ceiling and a framework for rents and tenant resources must be respected.
What is the tax treatment for the resale of a property under the Pinel law?
Like any other investment in real estate, the resale of a property is subject to capital gains tax.
Capital gains tax is the tax on the fact that you sell a property for more than you bought it. More precisely, it is the difference between the final sale price and the purchase price of the property transaction.
This is the difference between the sale price and the purchase price.
Two net capital gains must be calculated: the one that will be taxed under income tax (19% tax) and the net capital gain subject to social security contributions (17.2% tax).
How to sell a property under the Pinel law when there is a tenant?
In order to sell a property under the Pinel law, the owner can give notice to the tenant by registered letter with acknowledgement of receipt. This must be sent 6 months before the end of the lease.
It is possible to offer the tenant the opportunity to purchase the property, but the tenant has a right of pre-emption during the first two months of notice.
Please note: The owner can also decide to sell without giving notice, the tenant will occupy the premises under the same conditions with the future owner.
Is the owner obliged to resell the Pinel property?
It is not compulsory for the owner to resell a property under the Pinel Law after the end of the commitment period.
The owner may also decide to take back the property to live in, either as a primary or secondary residence.
What are the costs of selling a property under the Pinel law?
The owner will have to bear the costs related to the property and the transaction (carrying out technical diagnostics, drafting the advertisement, etc.) and those related to the agency fees.
What are the conditions for resale?
It is possible to resell a property under the Pinel law if the owners have respected two cumulative conditions:
Respect the duration of the commitment to rent the property. If the owner resells the property before the end of the commitment period, he/she will be obliged to reimburse the State for the tax reductions he/she has benefited from.
The property must not have been in deficit for 3 years. According to article 156 of the General Tax Code "a taxpayer, owner of a property, imputes a land deficit on his global income for a year, the property must be allocated to the rental until 31/12 of the 3rd year following the imputation". The land deficit is the negative difference between the income and the tax-deductible expenses of a property investment, for a landlord benefiting from the real estate regime.
Can you sell a Pinel home before 9 years?
The properties acquired to benefit from this scheme are new or refurbished properties, they have an A (or B) label on the energy performance diagnosis (DPE). They therefore do not require renovation work and will not suffer the same fate as the "passoires thermiques".
It is possible to sell a property under the Pinel law before the end of the commitment period in 3 major cases of force:
The death of the owner
An accident or illness resulting in the owner's disability
The dismissal of the owner
(Please note: Divorce is not recognised as a case of force majeure. The two ex-spouses can keep the property and share the tax advantage or one of the spouses can decide to keep the property by buying out the other).
In order to sell a property under the Pinel law, as with any other property, you must follow the procedures for putting it up for sale:
- Put together a file with the documents that the notary may request (technical diagnosis file, identity, documents relating to the co-ownership).
- Publish an advertisement, organise visits, negotiate the purchase price.
- Sign the preliminary sales agreement and the deed of sale a few months later at the notary's office.
- It is possible to sell a Pinel property under certain conditions.
- The Pinel tax exemption scheme offers a number of advantages, based on the investor's commitment to rent out the property for a certain period.
- It is possible to resell a property under the Pinel law if the owners respect two cumulative conditions: respecting the duration of the commitment to rent the property and not being in deficit for 3 years.
It is possible to sell a property under the Pinel law before the end of the commitment period in 3 major cases of force:
- The death of the owner
- An accident or illness resulting in the owner's disability
- The dismissal of the owner
- Like any other investment in real estate, the resale of a property is subject to capital gains tax.
You want to
to sell in Paris or its surroundings ?
Posted on 20/04/2023 by
Andy LECUYER
