Becoming the owner of a seasonal rental property can be complicated when you don't have all the keys to understanding the intricacies of real estate and taxation. Our AirBNB agency in La Grande-Motte explains to you today what property tax is and how it works.
Let's start with a small definition: Property tax is a local tax that is collected by local authorities from landowners in order to finance local public services. In France, it is calculated according to the cadastral rental value of the property, which is determined by the tax authorities. "It's always up to the owner to pay the property tax, describes Angélique Michel, director of our agency of AirBNB concierge service in La Grande-Motte. The tax notice is issued in his name, so he cannot ask his tenant to pay it in his place”.
As the website of the Ministry of the Economy explains, “the tax calculation method combines the cadastral value and the rates voted by the local authorities. The cadastral income constitutes the tax base for property tax: it is equal to the cadastral rental value less a 50% reduction. The cadastral rental value corresponds to a theoretical annual rent that the owner could draw from the property if it were rented. This rent is then updated and revalued each year. The 50% lump-sum allowance takes into account management, insurance, depreciation, maintenance and repair costs. The rates, applied to the tax base to calculate the amount of the property tax, are voted by the local authorities: municipalities, intermunicipalities and departments. »
The specificities of seasonal rental
Short-term furnished rentals have different characteristics from traditional furnished rentals. It can be offered in villas, apartments or studios assigned exclusively to transient customers, who occupy the premises for a few nights, weeks or months, without exceeding 90 consecutive days. It therefore does not constitute the principal residence of the tenant. Furnished tourist rental can be classified from 1 to 5 stars. To obtain it, you will have to apply to an accredited organization, which will organize a visit to your accommodation.
Even if seasonal rental taxation is a less complex area than it seems at first glance, it is good to know in which territory you are setting foot when you decide to rent accommodation for short periods. Unlike the classic furnished rental, the seasonal rental also involves carrying out certain procedures at the town hall:
- If the property is located in a very large city, you will have to obtain the change of use of the accommodation and then declare it as furnished accommodation
- If the property is located in a large city, you proceed with the reverse procedure (declaration then change of use)
- In a small town or village, you will only have to declare the tourist accommodation
On the other hand, tourist and classic furnished rentals have one thing in common: the income from the rental constitutes industrial and commercial profits (BIC). They are therefore taxed in this category for income tax.
Taxation of seasonal rental
Two tax regimes are therefore applicable: the flat-rate regime and the real profit regime.
First, the flat rate scheme. We speak indiscriminately of flat-rate scheme, micro BIC scheme or even micro-enterprise scheme. To qualify, the gross annual amount of your rental income must not exceed €72 for classic seasonal rentals, €600 for classified seasonal rentals or guest rooms. “With the flat-rate scheme, you cannot deduct your charges from your rental income, explains Angélique Michel, director of the YourHostHelper concierge service in La Grande-Motte. Instead, you benefit from an abatement on the gross amount of rent. The rate of this allowance therefore depends on the nature of your furnished tourist accommodation:
- 50% for classic seasonal rental
- 71% for classified seasonal rentals and bed and breakfasts
The real or real profit regime applies automatically if the rents are higher than €72 for classic seasonal rentals or €600 for classified seasonal rentals. You can also choose this tax regime below these thresholds, if it proves to be more advantageous for you. The advantage of the real regime is that, as its name suggests, it allows you to deduct your expenses for their actual amount. In addition, you can practice depreciation: you have the possibility of depreciating both real estate and furniture, to take into account their devaluation over time and their use.
Many charges can be deducted from the actual regime: insurance premiums (guarantee for unpaid rent, non-occupant owner, etc.), maintenance and repair expenses, loan interest and mortgage loan application fees, co-ownership charges or the remuneration of the real estate agency in the context of rental management, etc. If your charges are greater than your rental income, a deficit is created, which will be treated differently depending on whether you carry out your activity as a non-professional furnished rental company (LMNP) or as a professional furnished rental company (LMP). Taxation for furnished tourist accommodation also changes depending on the type of accommodation. For example, if you rent accommodation classified as "furnished with tourism", you benefit from a 71% reduction on all receipts!
If your rental income is less than €23 or less than half the income of your tax household, you are considered an LMNP. The deficit you create can be carried forward for 000 years, exclusively on non-professional furnished rental BICs. On the other hand, if your rental income is more than €10 and constitutes more than half of the income of your tax household, you are considered an LMP. The deficit you generate is chargeable to your overall income with no limit on the amount. “If your tax is insufficient to absorb the entire deficit, then you can defer it to your overall income for 23 years, explains Angélique Michel from our concierge service in La Grande-Motte. Do not hesitate to seek the advice of an accountant to choose the best tax income for your income. Indeed, although the real regime is more advantageous than the micro for the most taxed owners, but also when the charges are higher than the 000% and 6% reductions.
There are situations in which you can be exempt from taxes, as Angélique Michel points out: "if the furnished rental concerns part of your main home (such as a bedroom in your home), as long as the annual rent per square meter does not exceed a ceiling set by the public authorities, then you can be exempt from tax on your rental income. Also be aware that the fact of having bed and breakfast can allow you not to pay taxes if your annual rental income does not exceed 760 euros.
At first glance, the taxation of seasonal rentals can be complex to understand. But by taking the time to learn more or by consulting an accountant, it is quite possible to identify all the subtleties and optimize your rental income as well as your tax rates.
