Which tax system to choose for declaring the rents received?

The landlord is subject to special taxation which has a significant impact on profitability. It all depends on whether he wants to rent the apartment empty or furnished.

If he rents it empty, he can benefit from a regime called “microfoncier”. In this case, he benefits from an allowance for charges of 30% and is only taxed on 70% of the rents received. The declaration system is simple, because there are no supporting documents to produce, but this scheme is intended for lessors receiving less than 15,000 euros annually.

For lessors who earn more or who prefer deductions based on actual costs incurred, it is possible to choose the actual regime.

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In this case, a certain number of costs are deductible from the rents collected, such as the remuneration of the guards, the costs of the real estate agency for the search for the tenant, the drafting of the contracts and even the contributions paid to the trade union chambers of owners which give personalized advice. Work to maintain or restore the building or housing, rental repairs, work improving the comfort of the tenant are also deductible.

Land deficit

The choice between the microfoncier and the real regime is made each year at the time of the declaration of income, which allows the lessor to choose according to the work he has carried out during the year. Local taxes can also be deducted from rents as well as loan interest. And if in total all the costs incurred in the year exceed the amount of the rents collected, it is possible to create a “land deficit”.

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The costs incurred are first deducted from the rents collected and, if the amount of the rents is not sufficient to absorb them entirely, the remaining sum is then deducted from the total taxable income for the year up to 10,700 euros (this limit is now raised to 21,400 euros for energy renovation work).

This can allow a lessor to see his income tax greatly reduced, a significant advantage when carrying out work.

If the accommodation is rented furnished, the income is considered as commercial income and no longer property income. The “micro-BIC” scheme (industrial and commercial profit) intended for incomes of less than 72,600 euros in annual income allows you to benefit from a flat-rate allowance for charges of 50%, in particular to cover the wear and tear of furniture.

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The real regime in furnished accommodation allows, for its part, to deduct real costs as well as an amount for the depreciation of the property. The latter must be constant and can represent 2% per year for fifty years, for example, a period accepted by the tax authorities.

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