Income From Property In France
by Patrice Perrin
1 – Unfurnished lettings “Revenus fonciers”
1-1 : Régime réel
It applies for flats that have a minimum of furniture and that are rented to long term tenants (ie the tenant needs to bring his own furniture as a complement to be able to live on the premises). Miscellaneous expenses such as insurance, land tax (taxe foncière), real estate agency and accounting fees, maintenance works (plumbing, electricity…), mortgage interests…can be set against the gross rent to calculate the taxable income.
If there are some deficits, generally incurred by maintenance works and interest on mortgage, they can :
- Be set against the other taxable income for a maximum amount of 10 700 € (but not the part of it incurred by mortgage interest),
- Be carried forward for ten years to be set against the same type of income (real estate income).
1-2 – Micro-foncier
A scheme of micro-foncier does also exist whereby, when the total of rents does not exceed 15 000 € a year you can opt for it. Within this scheme, a flat allowance of 30% is applied to the gross rent in order to set the taxable income.
Apart from the income tax, these real estate income are also liable to the “prélèvements sociaux” (ie social contributions) including since 2012 for the non-residents. For 2014 income, the rate of these contributions is 15.5 %.
2- Furnished lettings « Loueur en meublé non-professionnel » (LMNP)
It applies typically for seasonal/holidays accommodations fully furbished that are rented to holiday makers or curists in Amélie-les Bains for instance.
2 schemes exist like for the “revenus fonciers”.
21 – micro-BIC
Only the gross rent has to be reported on the tax return. A flat allowance of 50% of the rent is granted for the expenses to get the net taxable income. Thus this scheme can not generate deficit, like the micro-foncier scheme described above. Furthermore, the maximum yearly rent is limited to 32 900 € (82 200 € if the house rented is classified as Chambre d’Hôte, Meublé de Tourisme or Gîte rural + the allowance is 71 % instead of 50 %).
22 – “régime réel“
This scheme requests to prepare full commercial accounts and be registered as a “Loueur en meublé non-professionnel” at the tax office (it is also true for the LMNP within the Micro-BIC scheme). It enables the tax payer to claim all the expenses directly linked to the activity including depreciation costs of the building and usually leads to a deficit that can be set only against the LMNP income of the following years.
This scheme can also be used by non-residents who own a house in France and rent it out when they are not in holidays in it, providing that they discount a part of the expenses (including depreciation costs of the building) pertaining to their share of occupation of the house.
Apart from the income tax, these LMNP incomes are also liable (like the “revenus fonciers”) to the “prélèvements sociaux”.
But the law that has extended since 2012 the “prélèvements sociaux” to the “revenus fonciers” of the non-resident is mute about the LMNP incomes of non-residents regarding these social contributions.
So we may assume that these incomes are still out of the scope of the social contributions for non-residents, at least for the time being. It was actually confirmed by the tax office.
For further information concerning this or any other accounting, finance and taxation issue, please do not hesitate to contact me.
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