Roche & Cie

Income tax return: Taxation of Rents in France

11 May 2017

All you need to know to properly declare rents in France.

Owners of rented real estate property must declare rents collected at the same time that they report their income – paper or online. The procedure is different depending on whether you rent your apartment or your house empty, furnished or that it is a seasonal rental.

When to declare your rents?

This year, if you are making a paper tax return, you must complete it before May 17th. If you are not a resident of France or if you live in the départements 01 to 19 (May 23), you will benefit from an additional delay on the Internet. In Departments 20 to 49, you have until June 30 and finally if your main residence is in Departments 50 to 976, you have until June 6.

How to report your rental income?

The tax administration makes a distinction between income from an empty rental and a furnished rental.

In an empty lease, rents are considered to be income from land. And there are two ways to report these land revenues. It all depends on the amount you cashed in the year.

If you are the owner and you receive modest rents, the tax administration has set up a specific scheme for you: the micro-land regime which is simpler than the land revenue scheme.

In this case, you can declare your rents in the declaration 2042 which provides a box (frame 4 box BE). The bar is set at 15,000 euros of rents excluding expenses, which represents 1,250 euros of rents per month.

You will not pay the tax on all the rents collected, but only 70% of them. The remaining 30% can therefore be used to pay the expenses associated with any real estate property. The 15,000 euros are therefore gross rents. And it is possible to declare the rents of a rental Pinel, Duflot, Scellier in this framework. Be careful, do not make the deduction yourself, enter the total amount of your gross rents and the tax will take 30%

The main advantage of the micro-land regime is its simplicity. You do not have to justify any charges you have borne for the apartment you rent. On the other hand, in some cases, if you have done important work for example, you have faced more expenses than the 30% provided by the tax authorities. In that case, there is nothing to prevent you from declaring your rents outside the micro-land regime, as if you were collecting larger rents.

It should be noted that it is not possible to change the regime between micro-land and traditional land-income regimes each year. If you choose to be taxed under the conventional plan, while your rental income is less than 15,000 euros per year, you must do so for three years.

What if your rents exceed 15,000 euros?

If your rental income is more substantial and exceeds 15,000 euros per year, you must declare these rents as income from land. You can then deduct the actual expenses that this property caused you. Thus, borrowing interest, management fees, property tax, works, condominium expenses can be subtracted from your rents.

What if my expenses exceed my rents?

In some cases, in the case of major work done to renovate an apartment for example, the costs borne by the owner may be higher than the rents collected. The case is provided for by the tax authorities, which allows the landlord to make use of this shortfall. This deficit is not imputed to the total income but remains deductible on the property income of the following ten years, ultimately limiting the tax on the income of the taxpayer. There is still a limit to this largesse of the tax: it is possible to impute 10,700 euros per year on your total income.

For more information, do not hesitate to contact the experts at Roche & Cie.

Cabinet Roche & Cie, Chartered accountant in Lyon.
Specialist in real estate taxation of non-residents.