PEL taxation: Does this investment become a tax monster after 12 years?

The Housing Savings Plan (PEL) is a popular option for saving to acquire real estate or to finance work. However, after 12 years, its taxation changes considerably. This article examines the tax implications of a PEL of more than 12 years, the tax rates, and the relevance of keeping this type of investment beyond this period.

Understanding how the PEL works

The PEL is a regulated savings product offering a fixed interest rate and the possibility of benefiting from a property loan at advantageous rates. Initially, the duration of the PEL is 4 years, but it can be extended from year to year up to a maximum duration of 10 years. Beyond this period, it remains in force but with certain restrictions.

Taxation of the PEL before and after 12 years

Taxation of a PEL before 12 years

Before reaching 12 years, a PEL opened before January 1, 2018 benefits from a tax exemption on the interest generated. Only social security contributions of 17.2% apply. For PELs opened after this date, interest is subject to the Single Flat-rate Withholding (PFU) from the first year, at an overall rate of 30%, including 12.8% income tax and 17.2% withholdings. social.

Taxation of a PEL after 12 years

Once the 12-year mark is crossed, the tax rules become more restrictive. The interest accrued each year then becomes subject to income tax. The saver can choose between two options: the integration of this interest into their taxable income, or the application of the PFU. In each case, social security contributions of 17.2% continue to apply.

What to do with a PEL over 12 years old?

The question of the relevance of keeping a PEL beyond 12 years depends on several factors. It is crucial to consider the interest rate offered by your PEL and compare it to other savings solutions available on the market. A PEL opened 15 or 20 years ago can offer a more advantageous rate than current products, making its retention attractive despite increased taxation.

Alternatives after 12 years of PEL

For those whose PEL has reached or exceeded 12 years, it may be wise to evaluate other savings products. Livret A, Life Insurance or even Company Savings Plans (PEE) can offer more attractive tax advantages, depending on each person’s personal situation and financial objectives.

Conclusion: The PEL beyond 12 years

The PEL remains an interesting investment depending on its opening date and its interest rate. However, it is essential to be aware of the tax implications after 12 years. By comparing the after-tax returns of various savings products, savers can make informed decisions to maximize the return on their savings while minimizing the tax burden.

• Taxation beyond 12 years: Interest earned after 12 years is subject to income tax.
• Single Flat-rate Direct Debit (PFU): Applies at the rate of 30% including 12.8% income tax and 17.2% social security contributions.
• Tax options: The choice between the PFU and the progressive income tax scale is decisive for taxation.
• Limited tax benefits: The tax advantages of the PEL decrease significantly after 12 years.
• Interest rate: A PEL opened in 2023 yields 2% before tax and social security contributions.
• Closing the PEL: Closing is not obligatory at 12 years, but the taxation becomes less advantageous.
• Automatic extension: After 10 years, the plan can be automatically extended each year for up to 15 years, but new tax rules apply.
• Impact on performance: The taxation of interest after 12 years significantly reduces the net return on the PEL.