Last Updated on October 3, 2024
The French budget was approved on December 29. The income tax brackets, ceilings, and allowances, as mentioned in our bulletin, haven’t changed.
However, some new measures were introduced during the review process.
One major update, as anticipated, is a stricter tax regime for French furnished lettings, aimed at addressing the housing crisis in crowded areas. These changes are retroactive, meaning they’ll impact rental income earned in 2024.
Understanding the changes to the Micro BIC tax regime for French furnished lettings
The Micro BIC tax regime, found under Article 50-0 of the French Tax Code, allows landlords to report rental income on their personal tax returns without needing to file detailed business tax accounts and returns.
Instead, a fixed percentage of the income is deducted as notional expenses. This regime is popular with non-French residents who occasionally rent out their holiday homes.
However, the 2024 French budget has introduced significant changes that affect furnished lettings. Here’s a breakdown:
Current system:
- Classified holiday rentals (meublés de tourisme classés) and chambres d’hôtes with annual turnover below €188,700 benefit from a 71% expense deduction.
- For regular furnished rentals, the turnover limit is €77,700, with a 50% deduction.
- Proposed changes:
- Initially, it was suggested to lower the turnover limit to €77,700 for all furnished lettings, with a flat 50% deduction.An additional 21% deduction was proposed for classified holiday rentals in areas without housing shortages (“zones non-tendues”).
- Final amendment:
- The approved changes introduce a much lower turnover threshold of €15,000, with a 30% deduction for all furnished lets.However, classified holiday rentals in “zones non-tendues” can still get a total 51% deduction, but only if the total rental income in the previous year was under €15,000.
This amendment has created confusion because the new Article 50-0 still references the older, higher thresholds, making it unclear how these changes will apply in practice.
The French tax authorities are aware of this issue and might try to fix it later.
What this means for you
- If your rental income exceeds €15,000 in 2024, you may need to switch to a more complex real BIC mode of taxation, which requires formal accounts and business tax returns.
- Some landlords might choose to limit their rental income to stay within the Micro BIC regime, but this could be difficult if bookings for 2024 are already confirmed.
- The situation might still change if the government decides to delay or further amend these rules.
For now, it’s important to assess your rental situation and consider getting professional advice to navigate these changes.
Who are we?
Property Tax International, is part of CluneTech. We specialize in filing French rental income tax returns for non-resident landlords with properties in France and other countries.
Our experienced tax team is committed to ensuring complete compliance with all foreign real estate tax obligations, both in France and internationally.
Last year, we successfully filed more than 322,000 tax returns.