The tax system of the furnished flat
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If you rent out a furnished apartment on a regular basis, you are engaged in a commercial activity. Income is taxed as "industrial and commercial profit" ("bénéfices industriels et commerciaux" or BIC). Included in this category is income from furnished rentals, from seasonal rentals, from bed and breakfast or from holiday property rentals. Also included is income from non-furnished property rented to someone who then sub-lets it as a furnished rental, when the rental is considered a commercial activity for you according to the terms set out in the rental agreement. Article 90 of the 2009 French finance law made numerous changes to the fiscal regulations applicable to furnished rental activity. In particular, it limits the ability to opt into the micro-BIC scheme and modifies how losses are accounted for under the "actual income" scheme. Above all, this law represents an in-depth review of the criteria according to which furnished rental landlords can be considered professionals.
The micro-BIC status
If your income from furnished rentals in 2010 did not exceed 32,100€, you are fully entitled to the micro-BIC scheme. The French tax authorities will then apply a statutory 50% reduction, with a minimum amount set at 305€, to take into account your costs. However, if this is the first or second year that you have exceeded this maximum allowable income (particularly due to the lowering, in 2009, of the income ceiling for the "micro" fiscal scheme for furnished rentals), you can still remain in the scheme this year (cf: BOI 4 G-1-09 et 4 F-3-09). N.B. rural holiday rentals, tourist furnished rentals and bed and breakfast properties (cf: BOI 6D-1-08) can come under the "micro" scheme if their income for 2010 did not exceed 80,300€. They benefit from a flat rate deduction of 71% of their rental income for costs.
Opting for the actual income scheme
If your costs in 2010 exceeded 50% of your rental income, it may be in your interest to opt for the actual income tax scheme in order to deduct their full value. A note of caution however, this option remains valid and irrevocable for 2 years, at the end of which it is renewed by tacit agreement for 2 year periods. The choice must made, in writing, before February 1st of the year of income (if you started your activity in 2010, you can opt in to this scheme up to the date of your first tax return).
You are registered under the "auto-entrepreneur" scheme
As renting out furnished property is considered a commercial activity, it is compatible with the auto-entrepreneur scheme. In this case, if you opted into the micro-social tax scheme, you also had the possibility of opting into the PAYE income tax scheme on your rental income in 2010. In which case, 1.7% will have been deducted at source, either monthly or quarterly. This income will not therefore be taxed this year according to the sliding tax scale. You must nevertheless declare this income on your next tax return, in order for the tax authorities to calculate the tax rate applicable to your other taxable income (effective tax rate rule).
How to declare income
Enter your gross income for 2010 on your 2042 C tax return, section B, boxes 5KP to 5MP if you have a professional status, or section C, boxes 5NP to 5PP if you are a non-professional. If appropriate, complete section F, boxes 5HY to 5JY to calculate the social security contributions. Attach this to your tax return forms n°2042 or 2042 S and send it all to your tax centre before the final date allowed for returns.
Income tax for non residents
People living not in France who have an accommodation in France have to subscribe a notification of revenues
The taxation of these people is available only under international conventions with France. (See the conventions on the website Impôts.Gouvernement in the part “Documentation”).
Taxation for non resident is the same as for residents :
- “Régime des micro entreprises”
- “Régime du réel simplifié”
See paragraph above.
The difference is the taxation rate, equal to 25% of the net taxable revenue.
The difference is that the rental revenues are not subject to the social tax -called CSG in French.
The notification should be made every year at the tax collection office for non residents (Centre des Impôts des Non-Résidents) :
9, rue d'Uzès
75084 PARIS Cedex 02
Tél. : 01 44 76 19 00
depot date :
The depot date for notifications is established according to the place of residence of the taxpayer.
- Europe and countries of the coastal Mediterranean: before the 30th April
- Africa (except the countries of the coastal Mediterranean) and North America: before the 15th May
- Central America and South America: before the 30th May
- Asia (except the countries of the coastal Mediterranean), Oceania and other countries.
Local tax on businesses
Renters have to pay the local tax on businesses.
The accommodations which are subjected to the council tax, are not subjected to the local tax on businesses.
As an owner (not living in the accommodation), you will not pay this tax. Moreover, the tenant being in the accommodation on the 1st January will not pay this tax but a tourist tax. If you do use your accommodation punctually, this tax will be due for payment.
The council tax is due by the owner when this latter use his accommodation, apart from the renting periods.
Regarding the tenants, they personally have to pay the council tax if they use permanently and exclusively, and even when the renter is due to pay the local tax on businesses.
In case of a short term rental, the tenant will not have to pay the council tax but the tourist tax.
The council taxi s yearly established, according to the situation on the 1st January of the taxation year.
You are not subjected to a notification. A taxation notice is automatically sent to you by the local tax office. The council taxi is to be paid at the accounts department.
A notice is automatically sent to every taxpayer on the 1st January. If you receive this notice, you just have to send a claiming to the local tax office, in order to ask for an exemption. Join to your claiming :
- A copy of your taxation notice.
- A letter explaining that the flat is aimed to furnished rental for short term and is never personally used by you.
- Every useful written proof. PARISIAN HOME will be glad to give you a statement with the rentals made during the year.
The property tax is yearly due by the owner or the usufructer of the building. It is established for the whole year, according to the situation on the 1st January of the taxation year. The cadastral revenue is the basis of the taxation. It is equal to the value of the cadastral rental with an allowance of 50 %.
You are not subjected to a notification, except for new or restored constructions.
A taxation notice is automatically sent to you by the local tax office.
Tax on rental income
The tax on rental income is due for the furnished rental, which are not subjected to the VAT, made in buildings constructed for more than 15 years.
The tax is equal to 2.5% of the amount of net revenues coming from the rental during the previous civil year.
How to notify?
Mention on the notification 2042, page 3 §4, line BL, the amount of the gross revenues.
Social tax (CSG)
Revenues coming from furnished rental are subjected to the social tax CSG.
Tax for vacant accomodation
The tax is due for each vacant accommodation –vacant for minimum two consecutive years, on the 1st January of the taxation year.
An accommodation is not considered as vacant if it is occupy at least 30 consecutive days during each year of the referent period.
The tax is not due in case of vacancy for reasons beyond the taxpayer’s control.
A notice is automatically sent to each taxpayer who does not pay the council tax.. If you receive this notice, you just have to send a claiming to the local tax office before the 31 December 2005, in order to ask for a exemption.
Join to your claiming:
- A copy of your taxation notice.
- Every useful written proof.
PARISIAN HOME will be glad to give you a statement with the rentals made during the year.