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Rental investment: The DUFLOT scheme
The Duflot Law
Created since January 1, 2013 to replace the "Scellier", it benefits taxpayers who acquire or build a new or similar home between January 1, 2013 and August 31, 2014. As of September 1, 2014, the investment becomes "DUFLOT PINEL". This scheme is renewed until 31 December 2021.
Investors
These are natural persons domiciled in France subject to income tax on all their income from French or foreign sources. The investment can be made directly or through a company not subject to corporation tax.
The buildings concerned
Eligible housing must:
• Respect an overall energy performance level;
• Be rented bare for use as a main residence for at least 9 years;
• Be located in municipalities classified in areas with an imbalance between the supply and demand for housing (zones A, A bis, B1 and zone B2 on approval).
As of investments made since 1 January 2018, zones B2 and C are excluded from the PINEL scheme subject to transitional measures: the PDC application must have been submitted before 31/12/2017 and the final acquisition must take place no later than 31/12/2018.
The obligations of donors
The tenant may be a natural person (other than a member of the owner's tax household or an ascendant) or a legal person subject to corporation tax.
The monthly rent per m2 excluding charges (corrected using a multiplier coefficient) as well as the tenant's resources must not exceed certain limits set by decree.
The tax reduction of 12%, 18% or 21%
It is calculated on the cost price of the housing selected within the limit of a ceiling per square meter of living space. This ceiling is set by decree and is up to € 300,000.
The reduction is spread over the duration of the commitment to rent (6, 9 or 12 years), and reduces the income tax payable by the landlord.
The benefit is granted in respect of the acquisition or construction of two dwellings per year.
Investors
These are natural persons domiciled in France subject to income tax on all their income from French or foreign sources. The investment can be made directly or through a company not subject to corporation tax.
The buildings concerned
Eligible housing must:
• Respect an overall energy performance level;
• Be rented bare for use as a main residence for at least 9 years;
• Be located in municipalities classified in areas with an imbalance between the supply and demand for housing (zones A, A bis, B1 and zone B2 on approval).
As of investments made since 1 January 2018, zones B2 and C are excluded from the PINEL scheme subject to transitional measures: the PDC application must have been submitted before 31/12/2017 and the final acquisition must take place no later than 31/12/2018.
The obligations of donors
The tenant may be a natural person (other than a member of the owner's tax household or an ascendant) or a legal person subject to corporation tax.
The monthly rent per m2 excluding charges (corrected using a multiplier coefficient) as well as the tenant's resources must not exceed certain limits set by decree.
The tax reduction of 12%, 18% or 21%
It is calculated on the cost price of the housing selected within the limit of a ceiling per square meter of living space. This ceiling is set by decree and is up to € 300,000.
The reduction is spread over the duration of the commitment to rent (6, 9 or 12 years), and reduces the income tax payable by the landlord.
The benefit is granted in respect of the acquisition or construction of two dwellings per year.
Good to know
Following the introduction of the withholding tax, the tax reduction for a Duflot investment is subject to a deposit payment in January if taxpayers have declared the previous year expenses giving entitlement to this tax reduction. The balance is paid in the summer on the basis of the tax return. In the event of a reduction or cessation of expenses giving entitlement to the tax reduction, the deposit paid in January must be reimbursed in part or in full. To avoid the reimbursement of a possible overpayment, it is possible to modulate or renounce the payment of the deposit each year at the beginning of December. In all cases, the amounts giving entitlement to a tax reduction must be indicated on the tax return.
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