Roche & Cie

Furnished rentals targeted by the Government

The Government wants to harden the taxation of furnished rentals

The desire to regulate the furnished short-term rental, a consequence of the rapid expansion of Airbnb, worries the realtors. They fear that the new obligations that could be imposed on platforms like Abritel or Airbnb would be extended to property managers. Two points are particularly concerned.

The first is on taxation: 

The Government has set up an interministerial committee including Bercy and the Ministry of Housing to reform and harden the taxation of furnished rentals. Currently, revenues from monthly rentals receive favorable regime said the micro-BIC (industrial and commercial profits). If revenues are less than 32 900 euros, the taxpayer may apply a reduction of 50%, ie they will be taxed on half the proceeds. Even better if it is a listed touristic furnished property, the allowance is 71% and the limit of its receipts is 82 200 euros.

The taxpayer may also opt for the direct tax scheme, which means deducting all expenses such as loans interests, amortizing the property and being taxed solely on profits.

Distortion

These plans create a distortion to the detriment of the bare rental, subjected to the land revenue system, which does not allow the amortization. With the exception of micro-land plan: where when rents do not exceed 15 000 euros, an allowance of 30% applies.

This advantage explains the expansion of the furnished rental, both less burdensome for donors and less taxed than the bare rental. Therefore Bercy wants to line up the two schemes, land revenue and furnished rentals. “The risk is to remove the regime of business profits that would affect many investors of furnished properties,” was said to the National Federation of real estate.

The other threat is the reporting obligations. During the discussion at the National Assembly on the digital law, it was adopted on 21 January 21, 2016 an amendment supported by twenty deputies, headed by Sandrine Mazetier, a Paris PS MP. This amendment requires the platforms as Abritel and Airbnb to verify that individuals who rent their apartments for short periods are entitled to do it, i.e. to verify if they owe the housing, and if they are renters, to ensure they obtained permission from their landlord. In the event of failure, the text provides fines of 25 000 Euros for individuals 80 000 Euros for Websites.

However, it is only a first reading; the final text is far from being adopted. But other failed attempts could return to the heart of the discussion. For example, the measure to impose to the digital platforms to declare the amounts received in the year by their announcers. “We fear that once adopted, the obligation may be extended to rental property managers” said a property manager.

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