Guide
New real estate program Overseas
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Written by: The Editorial Team
The advantages of investing in a new real estate development with the Pinel Overseas tax relief scheme
Principle of the Pinel scheme
Taxpayers who wish to become owners of a real estate property have every interest in looking into each development Pinel Law Overseas. This tax relief tool in effect since September 2014 is fairly straightforward to understand and presents major benefits. Simply apply a percentage (23, 29 or 32%) to the value of the real estate property to determine the tax reduction. Any new DROM COM development is covered by this scheme, but you must comply with a few conditions that we will address later in this article.
Why choose a new Overseas development?
Investing in a new development in Reunion or elsewhere in the French overseas territories can be profitable for various reasons. First of all, you could use this tool to generate rental income in the coming months. Choosing a new overseas development is also interesting if you plan to enjoy a peaceful retirement with supplementary income. Moreover, this type of investment is capable of capturing your attention if you have no desire to invest in stock markets.
Opting for a new real estate development in Reunion is an interesting approach to help your children since the Pinel scheme allows you to rent them the apartment, unlike previous schemes. The use of overseas Pinel is furthermore attractive since the tax benefits surpass those enjoyed by investors in mainland France.
The Pinel restrictions to know about
The scheme is of course regulated; it is imperative to comply with certain rules. The total investment amount for a new Reunion development is set at 300,000 euros. The calculation is therefore based on this amount; the reduction rate does not apply to any amount above it, even if the apartment or house in question is valued above 300,000 euros.
Furthermore, you should know that the acquisition amount per square meter must not exceed 5,500 euros for any investment in a new French overseas territory development. Finally, real estate acquisitions under the Pinel scheme are limited to two per year.
Ceilings to comply with for a Reunion tax relief development
Once you have finalized your investment, you must rent it and take into account two conditions to enjoy your tax benefit. On the one hand, the tenants of your new development in Reunion must not have substantial income. On the other hand, you are obligated to set a rent that does not exceed the ceilings set by the Pinel scheme. Investment in a new real estate development on this island thus promotes access to housing for modest-income households.
What changes with the Pinel law?
The provisions of Pinel succeeded from September 2014 the measures that regulated investments in any overseas Duflot development. The maximum rate increased from 29 to 32%. An overseas Duflot development did not allow hosting one's ascendants or descendants. The current scheme is more attractive since it authorizes the investor to rent the apartment to their children or parents.
The Girardin law
The Girardin Réunion program is an interesting alternative for certain individual investors. It is also about making a profitable financial operation and reducing your income tax. The tax reduction with a Girardin Réunion program amounts to 2,645 euros per square meter, to which a percentage is applied varying according to the issuance of the building permit.
In the context of a real estate investment in Réunion, know that the Girardin Overseas laws allow you to obtain overseas tax exemption following an overseas investment.
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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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