I wonder if anyone else has information that can help clarify things for me.
We want to rent out our own home for about 6 weeks this summer. I have been given differing information from the local tax guy in the Hotel des Impots and the non local guy who does our tax returns. Impots say we would pay 50% of income-not profit,as it is not a Gite and tax return guy says we would get 70 % relief if we register (not quite sure what the registration involves) so WHO is right ?
Thank you Peter,
that certainly puts it all in perspective…hmmmn bit of thinking to do.
Lets say for arguments sake, you get 6000 euros for the six weeks. If you are classified, you would be taxed on 29% of that - 1740 euros. If you are not, you would be taxed on 3000 euro(50%) .To be classified, you first of all have to be registered, which you do at your Mairie.
Hi me again,
Well, to clarify… we are tax resident in France, in fact spend most of our time over here cos we love it. The property is our own home which of course is fully furnished. We will be off in our camper van living by the beach.We haven't registered atall (as wasn't sure of all the implications) and this might just be a one off, designed to accumulate a bit of travelling money.Will advertise on a popular site on the web-good demand for this area.
My background is hotel management and more recently holiday rentals in uk, so would enjoy it too. Just not sure, as Paul mentioned-whether it will be worth it financially. I gather any declared income(not just profit) will be added to our existing declared income, pensions etc, and then taxed, but just not sure whether it will make a big enough difference to taxes if we go throughout the registration palava. Also do not relish the possibilty of being 'focussed on".
I am finding everyones comments interesting/helpful and hope others are too…
Hi Steven. I think the original poster of this thread said she was thinking of renting her house for 6 weeks during summer - I don't know her, but I would guess that:
- this isn't her primary source of income
- she hasn't registered her property (e.g. with Gites de France)
Hence my comment that it might not be worth the hassle. There are many different circumstances which determine tax liability - are you registered to pay tax in France or the UK (or both)?, are you registered as a business?, is the property furnished or unfurnished?, what impact will any derived profit have on the Social contributions you pay ? etc ).
It may be worth it for her.. but she doesn't say.
Hi Clara/Paul - i understand it has to be primary source of income, and has been relayed (More or less) by 2 chambre d'hote owners and a french accountant. Don't know for certain about registration but I'm pretty sure they both were. (Tbh that's the reason I thought everyone did it...!)
We have been running a gite for 15 years, under the Micro_bic scheme, and we will have to be classified this year (income from July 2016) if we want to continue receiving the 70% tax allowance. It does not appear to be too onerous, and there are other organisations that you can use other than the ubiquitous gites de France. If you are letting to non-french, it would not really matter which grading you got. Only that the higher the grading, sometimes the tax de sejour is greater (depends on the commune). Good luck.
Hi Steven, can you expand on why the first 30k is practically tax free? Is it due to a minimum income? Does this only apply if you are registered as a gite? Thanks
Not so sure that is strictly correct Steven - but I am no expert.
Limited knowledge here as I've not started renting yet...but I was recommended by a local UK expat couple a French accountant when I arrived, he was very helpful even in Franglais...there are lots of rules as we know in France but a good accountant will steer you on the right side of the law and maintain a healthy income level to make it worthwhile. If "it's not worth the hassle" you're seriously doing something wrong! Basic rule chambre d'hotes and gites first 30k each year is more or less tax free!
Melissa do you know what the implications are of being registered as a classement prefectoral? My understanding is that the requirements are onerous and you become scrutinized??
If you are resident in France you would declare it as income on your tax return and be taxed at the applicable marginal rate as with any income. I believe there is a line for rental income.
You can register as a business or use the Micro BIC regime, and you can decide whether for the rental income you anticipate receiving it is worth your time and whatever other costs.
I agree Melissa, that the risks involved in longer term rentals are not worth it.
I only raised the point because, after paying the tax and going through all the hassle, it would hardly seem worth the effort just for a few weeks rent
Bureaucracy only seems to swing into action when something arrives on their radar.
Thanks Melissa and Rupa,
I have been told that this is an area that the french tax reapers are focussing on with HUGE penalties if caught not declaring it.
I might be a tiny bit tempted to try it one year, enough other people do around here, but my husband says he wants to sleep at night and so it would have to be all above board. If there is enough profit it may be something we would do annually to pay for a few little luxuries and looking over our shoulder would take away a lot of the pleasure.
thank Melissa, that is really helpful, so now I will just find out the ups and downs of 'classement prefectoral' and hopefully make the right decision from there.
That is an attitude of a lot of men have but few women. Men are risk takers - especially in France. If it is a one off payment for say €500/week probably nobody but if it is a regular payment or say 1000/week or likely to be an annual rental then IF it gets picked up by the tax man the consequences will be harsh.
I'm curious...if you didn't broadcast the fact that you were renting your house for 6 weeks, who would know?
I received this reply about rentals from my accountant which might help:
Concerning renting your previous main residence to your mother, instead of doing seasonal summer rental, please note the following
- It will be taxable furnished letting income, whether it is paid to you from holiday lets or for the rental of what will become your mother’s main residence
- Under regime MICRO-BIC, the taxable income will be 50% of the rental takings in either case (although for holiday lets, the abatement could be 71% if you obtain a ‘classement prefectoral’ meublé de tourisme)
- Under the MICROBIC regime you cannot deduct your real expenses (electricity, water, fuel, depreciation of furniture and house, taxes foncieres etc…) in either type of rental
- The regime REEL option, which enables you to deduct real expenses, involves full business-like accounts and would probably not be cost-effective in either type of rental
I picked up form 2042 C PRO from the Impot yesterday. The gross income must be filled out in box 5ND. I was not advised to do more than that.
When you say you can register as a business, or use Micro BIC, is this a choice? I am concerned that the fees required to join would remove any benefit, especially since this sort of rental income is for a couple of summer weeks only ?
Peter is there a fee to pay to be registered?