Taxation of French rental income: Understanding your tax obligations as a landlord

With the boom in seasonal rentals, there is an increasing number of inquiries regarding the taxation of rental income in our beautiful country. Indeed, depending on the type of rental and the chosen regime, there are several tax options. This article aims to explain the different tax implications for unfurnished and furnished rentals, focusing on the taxation of properties owned by individuals.

First and foremost, it is essential to specify that rental income from a property located in France must be declared in France, regardless of the owner’s identity and tax residence

Unfurnished Rental

In the case of an unfurnished rental, the rental income falls under the category of « revenus fonciers » (property income), which is straightforward to declare as it is done directly on your personal income tax return. You have two options: the actual regime (régime réel) and the simplified regime (micro-foncier).

Under the regime réel, you can deduct certain expenses incurred to maintain the property in good condition, such as maintenance costs, insurance, and property tax. Taxes and social contributions are calculated based on the taxable income (i.e., rents received minus deductible expenses). You must use form 2044, an annex to your personal income tax return (form 2042).

The simplified regime (micro-foncier) allows you to benefit from a flat-rate deduction of 30% of your gross rents without having to provide any justifications. Note that this regime is limited to €15,000 of property income. Taxes and social contributions are calculated on 70% of your gross income (after deducting the 30% flat-rate deduction), and you must declare this directly on your personal income tax return.

Furnished Rental

In the case of furnished rentals, whether for short or long term, the taxation differs significantly from unfurnished rentals as it is considered a commercial activity rather than a civil one. Here’s what you need to know:

The first step is to obtain a SIREN number from the registry of the commercial court in order to declare your furnished rental income. This is a mandatory step that takes a few days to a few weeks at most.

Once you have obtained your SIREN number, you have the choice between the actual regime (régime réel) and the simplified regime (micro BIC), similar to unfurnished rentals.

Under the regime réel, you can deduct expenses related to the furnished rental, including repairs, furniture, taxes, and insurance. Additionally, you can also depreciate the property, which will reduce your taxable profit. Taxes and social contributions are calculated based on the taxable profit (rental income minus expenses and depreciation). If you have no taxable profit, you will not have any taxes to pay. The declaration is a bit more complex as you must produce annual accounts using form 2031, which needs to be submitted electronically to your tax office, and then report the profit or loss on your personal income tax return.

The simplified regime (micro BIC) allows you to benefit from a flat-rate deduction of 50% of your gross rents without having to provide any justifications. Taxes and social contributions are calculated on 50% of your gross income (after deducting the 50% flat-rate deduction). You must declare this directly on your personal income tax return without providing annual accounts as required in the actual regime.