Guide
Overseas real estate investment
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Written by: The Editorial Team
The benefits of the Pinel law for an overseas investment
Eligible properties
Several types of properties are eligible for the Pinel Overseas scheme Pinel Overseas and allow tax exemption during an overseas investment. Their common feature is compliance with the thermal regulations standards 2012 (RT 2012). An overseas investment is for example the purchase of an apartment that has just been built in an overseas French territory in Pointe-à-Pitre or in Réunion. Also concerned are properties in future state of completion. Furthermore, tax exemption for an overseas investment is possible for an old property that is subject to rehabilitation work.
Opportunities to seize overseas
Investing in real estate overseas is a way to get a foothold in the tropics. It is also an initiative that can follow a professional proposition in the overseas French territories. Tax exemption overseas with a real estate investment helps to more easily finance a mortgage loan, particularly when the initial down payment is low or zero.
Changes in investment regimes
First, the overseas investment ceiling per square meter of area was set at 4,000 euros for any overseas property investment completed in 2010, 2011 and 2012. The Duflot and Pinel regimes then raised this limit to 5,500 euros. These two schemes differ from each other in different ways. An overseas investment in 2013 was increased by 10% compared to a real estate acquisition in mainland France. The increase is now 11% for each taxpayer who wishes to invest overseas since September 2014.
The complexity lies mainly in understanding the different tax reduction rates in force with the Girardin law for any overseas property investment. For a building permit obtained in 2012, the reduction rate is systematically 26%. In contrast, an overseas investment in 2010 and 2011 entitles you respectively to a tax relief of 48 and 45% of the value of the real estate property.
What are the constraints of the Pinel scheme?
Several conditions regulate the Pinel scheme. First, tax benefits are granted to investors and new landlords who comply with rent ceilings. Moreover, overseas investments give entitlement to tax exemption for those who comply with tenant income ceilings. The tax benefit is granted within the limit of an overseas investment not exceeding 300,000 euros per year.
Nothing prevents you from buying an apartment for sale at a higher amount; the application of the reduction rate will be based on this ceiling. The first overseas investment declaration is made with the CERFA form 2044 EB. Do not confuse the classical tax reduction with the overseas investment tax credit. The first reduces the amount owed to the tax authorities while the second directly allows the taxpayer to receive a certain sum of money into their bank account.
Do you wish to make an overseas investment? Know that thanks to the New Program and the Girardin Overseas law, overseas tax exemption is possible.
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The editorial team
Passionate about overseas real estate, we follow daily the tax incentive schemes in the DOM-TOM. Our objective: to give you the keys to invest peacefully in Guadeloupe, Martinique, Reunion, Mayotte, French Guiana or Polynesia, with clear information and practical advice.
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