You are a private individual and tax resident in France or a non-resident and let out a property.
You are an individual and indirectly hold an investment property offered for rental via an SCI (non-trading company for ownership and management of property).
Taxation in France
In France, the tax regime for rental income depends on several factors such as the type of person holding the property (legal or natural person) and whether the rental property is furnished or not.
Concerning natural persons, the tax regime varies according to the type of rental property. If the property is empty, the income generated is regarded as land income. The taxation of land income can follow a simplified regime if gross income from all the rental property does not exceed €15,000 a year: the gross income (rent, insurance claims etc.) is thus taxed directly according to the progressive income tax scale after applying a 30% allowance.
As an option or indeed if the amount of income exceeds €15,000, the profit and loss regime is used. Under this regime, certain expenses provided for by the law are deducted from the gross income (management fees, insurance, taxes, maintenance expenses, improvement works etc.).
If there is a deficit, this can, under certain conditions, be set off against the total income up to a limit of €10,700.
If the rental property is furnished, the tax regime tips towards that of commercial enterprises. However, individuals can, under certain conditions, have their furnished rental income qualified as “non-professional”. The simplified regime also applies if the gross income does not exceed €70,000. The relevant tax allowance is then 50%.
If you opt for the profit and loss regime, you need to keep commercial accounting records and submit a simplified tax return. The profit and loss regime has the advantage of being able to deduct the depreciation on the rental property from the taxable profit.
If a property is rented via an SCI, the tax regime varies again according to whether the property is empty or furnished. If it is an empty property, the principle of fiscal transparency means that the taxable profit is determined at company level and then taxed at the level of the business partners in relation to their shareholdings.
If an SCI, initially transparent, has to let a furnished property, its taxation regime is changed and corporate tax is payable on its profits. The dividends subsequently distributed to the partners will then be taxed under the investment income regime.
- We can help you in your project to form a rental/sales SCI.
- We can help you set up the regime for non-professional furnished letting and the preparation of your tax return.
- We can help you in your project to transfer your property.