In this article, we will explain in depth how you can calculate your rental income in France and who can help you file your French tax return online.
If you are a non-resident in France who owns and rents out property there, you аrе subject to income tax both in France and your country of residence.
We assist non-resident landlords who own rental properties in France with the preparation and filing of their annual French property tax returns for non-residents.
Will I pay tax on rental income in France?
Rental income from French properties is taxable in France, regardless of whether you are a resident or non-resident of the country.
You will be required to file a French income tax return (Déclaration des Revenus) on an annual basis in France to report any rental income even if there is a loss.
Returns are due in April/May of the following year. You will have to report your income also in your country of residence.
Your rental income will be subject to both French income tax and social charges, so you need to keep both in mind.
However, some distinctions depend on whether you are a resident or a non-resident, as well as the type of business regime your property falls under (furnished or unfurnished letting).
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How to calculate tax on rental income in France
So, how do you calculate your rental income tax in France?
If you are a non-resident, your rental income will be taxed at 20% for revenue up to a threshold of €28,797 (2024).
Any rental income above this amount will be taxed at a rate of 30%. These rates apply to the net rental income after the deduction of eligible costs or the standard allowance.
The second option is to apply the French income scale rates to your worldwide income to calculate the effective tax rate. In this case, you will be taxed as a French resident but your income that is not subject to French income tax will be subtracted.
What are the social charges on rental income for non-residents?
Non-residents in France are liable for social charges on rental income in addition to French income tax.
In 2019, the French government changed the law. Social charges are now replaced with solidarity tax (prélèvement de solidarité):
7,5% for EEA residents and UK residents and 17,5% for non-EEA residents.
*Note: EEA is the European Economic Area – The EEA links the EU member states and three of the four EFTA states (Iceland, Liechtenstein, and Norway).
In January 2021, the French government agreed that UK residents with income in France only need to pay the 7,5% solidarity tax and if someone overpaid the extra fees before, they can get a refund.
How is rental income taxed in France?
Rental income in France is taxed differently depending on whether you rent out a furnished or unfurnished property.
| Furnished Accommodation | ||
| Tax Regime: | Micro BIC | Regime Réel |
| Max Turnover: | €77,700 / €188,700 | Unlimited |
| Tax Allowance: | 50% / 71% | Eligible Costs |
| Unfurnished Accommodation | ||
| Tax Regime: | Micro Foncier | Regime Réel |
| Max Turnover: | €15,000 | Unlimited |
| Tax Allowance: | 30% | Eligible Costs |
Furnished rentals
When dealing with furnished rentals (or bed and breakfast), whether for short or long terms, the tax rules are different compared to unfurnished rentals.
Furnished rentals are considered commercial activities.
For furnished lettings, if you receive up to €77,700, you can choose between “Micro-BIC Regime” (also known as “Micro Scheme”) and “Regime Reel”.
Here’s what you need to know:
To get started, you must obtain a SIREN number from the commercial court registry to report your income from furnished rentals. This step is mandatory and typically takes a few days to a few weeks.
Once you have your SIREN number, you can choose between two tax systems: the actual regime (Régime Réel) or the simplified regime (Micro-BIC), similar to what’s available for unfurnished rentals.
If you earn less than €77,700, then you can choose between regime Régime Réel and Micro-BIC Regime because Régime Réel may be more cost-effective for you (in case your expenses are more).
If you earn more than €77,700, then you must apply Régime Réel and you don’t have the option to choose.
Micro-BIC Regime
When using the “Micro-BIC Scheme,” your taxable outcome is calculated by applying a 50% allowance to your gross rental income, and then this figure is taxed at the income tax scale rates.
The primary benefits of the “regime Micro-BIC” are its speed and simplicity: all you have to do is fill out the box in your supplementary income tax return with the whole amount of gross annual income that was collected throughout the year.
As mentioned above to qualify for the regime Micro-BIC, your annual rental income must not exceed €77,700 and businesses can not benefit from this tax regime.
Régime Réel
The concept of the “Régime Réel” is to deduct all of your costs and expenses incurred for the activity of furnished rental, depreciation, and building maintenance from your rental income.
After deducting expenses, the net result is taxed at the income tax scale rates.
What expenses can I deduct from my rental income in France for furnished lettings?
Most expenses that you can deduct are similar for all countries including:
You can depreciate:
- purchase costs (including notary fees)
- land registry taxes
- depreciation of the building
- depreciation of the furniture
You can deduct also the expenses for the current year:
- interest on a loan
- facility charges
- management agency’s fees
- letting agency’s fees
- cleaning, maintenance fees, and repair costs
- utilities ( gas, electricity, water, TV, internet)
- accountant’s fees
- advertising fees
- property insurance fees
- a “maintenance” trip (to check your property)
- local taxes
Which tax regime to choose for my furnished rental -Micro-BIC Regime or Régime Réel?
Here is a recap.
If you’ve recently purchased a property to enter the furnished rental market, it’s advantageous to report your rental income using the ‘Régime Réel.’
This allows you to deduct notary fees, agency fees, loan interest, property depreciation, equipment, and any related work when initially declaring.
However, if the property is inherited or held for an extended period, the ‘Regime Micro-BIC’ might be more beneficial.
This is because charges and expenses related to your non-professional furnished rental activity may be less than 50% of your rental income for that year.
Important to note: You can switch tax regimes at any time, but keep in mind that the chosen plan is valid for one year and automatically renews unless changed.
Choosing ‘Régime Réel’ involves deducting all expenses, property amortization, equipment costs, and structural work from your rental income.
While administratively demanding, requiring meticulous financial record-keeping and submission to the French Tax Administration, it proves more profitable in over 80% of cases.
The advantage of the ‘Micro-BIC’ regime is that it is fast and simple: just enter your yearly income in the designated box on your tax form.
You will get a 50% tax reduction, with the taxed amount based on your income bracket applied to the remaining 50% of your rental income. To qualify, your rental income must be under €77,700 per year, and businesses are not eligible for this tax system.
In the end, if you are unsure which tax regime is best for you, you can rely on a property tax professional to help you.
Our tax experts will examine your situation, advise on the most beneficial tax regime, and help you save money by making the right choice.
Got questions? Request a free callback from a tax expert.
Unfurnished rentals
You have again two options: the actual regime (Régime Réel) and the simplified regime (Micro-Foncier).
If your accommodation is unfurnished and your income is less than €15,000, you can choose between regime “Micro Foncier” and “Régime Réel”.
Regime Micro Foncier
If you choose regime Micro Foncier, you’ll need to declare how much money you earned from renting out your property, and the government will automatically deduct a 30% flat-rate tax from that amount to cover expenses that are allowed for renting out your property.
You won’t have to report these expenses separately.
After subtracting the 30% allowance for expenses, your taxes will be calculated based on the remaining 70% of the money you earned.
Régime Réel
If your letting is unfurnished and your income is more than €15,000, you cannot choose a regime and you must report your rental income under the regular regime -“Régime Réel”.
And if your income is less than €15,000 you can also choose this regime as it may be more profitable for you (in case your expenses are more than 30% of your total income).
Under this regime, you can claim various rental expenses, such as mortgage interest, administrative costs (like agency and condominium management fees), legal fees, and repair and maintenance expenses.
However, some costs like utility bills, owner travel expenses to inspect the property, and advertising costs are not allowed as deductions. But these costs are usually not applicable for long-term unfurnished rentals.
What expenses can I deduct from my rental income in France for unfurnished lettings?
You can deduct:
- Management and caretaker fees
- Provisional syndic charges for the current year
- Balancing syndic charges for the previous year
- €20 notional deduction
- Insurance
- Repairs and Maintenance
- Rates/local taxes
- Mortgage interests
- Bank charges
- Accounting fee (our fees as well)
Got questions? Request a free callback from a tax expert.
I am a UK tax resident, do I need to pay UK income tax on my French property income?
If you are a UK tax resident, declaring rental income in France and the UK is obligatory and that’s similar if you are a tax resident in any other country. If you will pay tax depends on the rental income and the allowable expenses.
The tax base may differ due to UK domestic rules, which allow for a deduction of actual letting costs, and may result in different net taxable income in France and the UK.
The difference in tax year between the two countries can also cause difficulties. Seeking expert tax advice is strongly recommended to understand French and UK tax liabilities.
PTI Returns’ tax experts can help you with this.
Will I be taxed twice – in France and in my country of residence?
Depending on the terms of your home country’s double taxation treaty, the tax collected in France may be offset against that of your home country.
According to the majority of international tax treaties, if the tax paid in France exceeds the tax due in your home country, you will not be required to pay additional tax in your home country.
Who can help me file my annual income tax returns in France?
Do you feel overwhelmed and stressed by the prospect of dealing with tax papers?
We are here to help you!
PTI Returns is part of Clunetech. We have more than 25 years of experience in international tax, and we will keep you compliant with the French tax authorities.
Do you want to learn about our French property tax return filing service?
5 reasons why our clients choose PTI Returns instead of local accountants:
- Better value – we offer a more affordable service than your local accountant
- One-stop shop – need to file tax documents in more than one jurisdiction? You can do it all online with PTI Returns! This is one of the most unique things that sets us apart from most accounting services
- Property tax specialists – We know international property tax! We guarantee to properly determine your residency status and apply every tax relief you’re entitled to
- No language barrier – we speak our client’s language and communicate with the local tax authorities on their behalf, ensuring their forms are filed correctly
- Local knowledge – we have offices all over the world. This enables us to have substantial local knowledge in every country and help you to maximize your investment profit potential
Got questions? Request a free callback from a tax expert.