Today, we are tackling a subject that can be a headache for LCD investors: taxation and, more specifically, the subject of Corporate Property Tax (CFE) and Housing Tax.
In the field of short-term rentals, the CFE and the Housing Tax are two taxes for which the owner may be liable. These are local taxes calculated according to the cadastral rental value.
Unlike the housing tax, the CFE is generally little known to investors in short-term rentals.
As an investor, you are certainly wondering if you are liable for these taxes? Does being taxable on one exempt you from paying the other? Don't worry, at the end of this article, local taxation will no longer have any secrets for you!
The CFE is a local tax Due by professionals exercising a self-employed activity on a regular basis in 1ErJanuary of the tax year. It concerns real estate used by businesses for their professional activity.
As a short-term rental investor, are you subject to it? The answer is yes!
The furnished rental business, whether professional (LMP) or not (LMNP), is considered a professional activity from a fiscal point of view. You are therefore undebted to the CFE.
To Declare the CFE, You Must Do So Before 1Er January of the year following the creation of your business. You then benefit from an exemption the year the company was created. If you created your business in 2023 as part of your short-term rental investment, you must therefore simply declare the CFE before 1Er January 2024 but you will not pay this tax for 2023.
Housing tax is a local tax in France that is due by anyone experiencing a home in 1ErJanuary of taxation. Since the 1Er In January 2023, it was abolished for main residences. Only second homes are subject to this taxation (Article 1407 of the General Tax Code).
As an investor and owner of a property for short term rental, are you liable for this tax?
The Council of State recently confirmed that only the owner who wishes to reserve the use of his property for part of the year and rent it for the rest of the time is liable for this tax (Council of State - decision of 15 June 2023). In this case, the owner is not subject to the CFE.
If your property is intended for short-term furnished rental all year round and you do not reserve the use of it from time to time, you are therefore not liable for housing tax.
So far it's easy, isn't it?
But beware, taxes have a different interpretation: they assume that you can reserve the enjoyment of the property from time to time and will therefore issue a housing tax notice, even if you are not subject to it.
In the event of double taxation (CFE and Housing Tax), you must therefore provide proof that you do not occupy the property, even temporarily, and demonstrate that the property is for the exclusive use of the rental.
At OIQIA, we are used to this situation and provide our doubly taxed customers with a certificate indicating that the property is exclusively reserved for short-term rentals, as long as the contract provides for it.
As you will have understood, as an investor, you are liable for the CFE, but not for the housing tax, which concerns owners who reserve the temporary use of the property. You will therefore not pay the CFE and the Housing Tax.
At OIQIA, we know that as an investor in the field of short-term rentals, you often have questions related to taxation. This is why our clients benefit from legal and fiscal monitoring for their investments.
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