For French residents looking to generate income from renting out gites or other investment property there are a number of different French income tax regimes applying to rented property which determine the amount of net income you will actually be taxed on. These regimes depend on whether you let furnished or unfurnished accommodation, and the exact nature of your rental activities.
The regimes are summarised in the table below:-
|Furnished accomm.||Unfurnished accomm.|
|Tax regime||Micro BIC (1)||Micro BIC (2)||Regime Réel||Micro Foncier||Regime Réel|
|Tax allowance||50%||71%||Actual costs||30%||Actual costs|
Note: Micro BIC (2) relates specifically to ‘gîtes ruraux’, ‘meublés de tourisme’ and ‘chambres d’hôte’, which have received an official classification and include the provision of ‘para-hotelier’ services (such as supply of linen, cleaning, breakfast).
Under the ‘Micro’ regimes the net rental income assessable to French tax is determined by deducting a fixed percentage of your gross rental income or business turnover. Under the Regime Réel options you can deduct your actual costs. This latter option is more suited to professional landlords of long term rental accommodation who are able to employ the services of an accountant to manage tax returns and advise on what costs are allowable and accepted by the French tax authority. These include general management costs, property taxes and loan re-payments.
Most owners of furnished accommodation will have their rental income taxed as additional personal income at their marginal household rate. Social charges are also payable. [Social charges refers to CSG contribution sociale généralisée which amounts to 15.5% at the time of writing]
If you are looking to rent out property as a professional landlord through a separately constituted letting business then you will need to employ an accountant to advise on the most appropriate business structure, registration requirements and tax regime for your business objectives and scale of operation, and to manage your annual accounts and tax reporting.