While Pinel will end in the coming months, another tax system for rental investment could gain popularity.
The Pinel system, already reduced in recent years, will not be not renewed beyond the end of December 2024. If there is no real equivalent in new buildings, another tax system could take over in renovated old buildings: the “Denormandie”.
As with Pinel, Denormandie offers a tax reduction for those who buy a home and agree to rent it out for a minimum period, with rents around 15% cheaper than market rates.
Tax rebates depending on the rental period:
- 12% of the net cost price of the accommodation for a rental period of 6 years
- 18% for a 9-year rental period
- 21% for a 12-year rental period
The cost price taken into account in this calculation is capped at 300,000 euros (and 5,500 euros per m2 of living space).
However, there are conditions to benefit from it. The cost of the work must represent at least 25% of the total cost of the operation and only certain works are taken into account (mainly energy renovation works).
As for the eligible territories, the system is now accessible in several hundred cities. We are talking here about the municipalities concerned by the “Action cœur de ville” plan, those that have signed a territorial revitalization operation agreement (ORT) and those whose need for housing rehabilitation in the city center is particularly marked. Most of them are located in relaxed rural areas, but not only.
We can thus cite municipalities such as Clermont-Ferrand, Perpignan, Caen, Brest, Poitiers and even some cities in Ile-de-France (Trappes, Sartrouville or Corbeil-Essonnes for example). There are an online simulator on the service-public.fr website to find out if your city is covered by this system.
Higher yields
In 2023, nearly 1,500 homes were renovated under this Denormandie scheme. This remains limited, but the scheme has many advantages. First, it meets the current renovation challenges. In addition, it often displays higher yields than Pinel. A gross yield of up to 5.5% can be achieved in some small towns, while it is more around 3% for Pinel in old buildings.
This yield is explained in particular by the fact that the housing concerned often has very low prices, because they require major work and are located in areas with low demand.
In front of the new real estate crisis Some developers are even thinking about getting involved in Denormandie. Instead of just land, they would also buy old buildings, renovate them and resell them in pieces in tax-free mode. Especially since last April, the system has been extended to real investments in co-ownerships in financial difficulty.
Rental investors still have some time to make up their minds. The Denormandie scheme has been extended until 31 December 2027.