Unfurnished lettings “Revenus fonciers”
This applies to property with a minimum of furniture, 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).
A scheme of micro-foncier also exists where the total rent does not exceed 15 000 € a year. 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, this property income is also liable to “prélèvements sociaux” (ie social contributions) including since 2012 for the non-residents. For 2014 income, the rate of these contributions is 15.5 %.
Furnished lettings « Loueur en meublé non-professionnel » (LMNP)
This applies typically to furnished seasonal/holiday accommodation rented to holiday makers or ‘curists’ in Amélie-les Bains for instance.
Two schemes exist like for the “revenus fonciers”.
Only the gross rent has to be reported on the tax return. A flat allowance of 50% of the rent is granted for expenses tbefore the net taxable income. Thus this scheme cannot 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 %).
This scheme, unlike the micro-Bic, requires the preparation of full-blown accounts to French accountancy standards and additional tax forms, and is therefore more costly. It requires also to 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.
Non-residents who own a house in France and rent it out when they are not there themselves can use this scheme, 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”.
Note also that, as an indirect consequence of the EUCJ De Ruyter ruling in 2015 the law that has extended from the income generated in 2015 the “prélèvements sociaux” to the “LMNP” of the non-resident