Short-term rentals have become a popular solution for real estate investors to maximize their income. And for good reason! France is now in pole position on the European LCD market. Among the advantages of the short term, an income greater than the residential market, a property available immediately and, above all, attractive taxation. But it's essential for investors to understand the basics of taxation for LDCs.
In France, income from short-term rentals is subject to income tax. They are declared in the property income category. There are two statuses: professional furnished rental and non-professional furnished rental.
You fall into this category if the income from your short-term rental is greater than €23,000 including tax per year or the total amount of professional income from your fiscal household.
As a professional, it is up to you to choose the legal regime that best suits you: corporate taxation, the micro-enterprise regime or income tax. In the latter case, your rental income is considered as BIC (industrial and commercial profits).
It is the actual regime that applies (except in the case of micro-enterprises). You can therefore deduct from the overall income your expenses and depreciation related to your furnished rental business, but also any deficits.
This time, if your income related to the short-term rental of your property is less than €23,000 including tax per year or the total amount of professional income from your tax household, you fall into the category of non-professional furnished rental. Your rental income is subject to income tax.
If your annual revenue exceeds €72,600 excluding VAT, the actual regime must apply: you deduct all of your expenses (for example amortization, loan interest or janitorial fees) according to the expenses that are actually incurred.
If they are less than €72,600 excluding VAT, you have the choice between the real regime or the “micro-BIC” regime.
In the case of “micro-BIC”, no deduction from your expenses is made, you simply benefit from an automatic reduction of 50% on your rental income. In the particular case of classified tourist accommodation, i.e. when an organization has given it a rating of 1 to 5 stars, this tax regime is very advantageous. In fact, the annual revenue limit to benefit from this regime increases to 176,200€ excluding VAT and you benefit from a flat rate of 71%.
The “micro-BIC” regime is simple since it does not require any accounting. However, be vigilant and do simulations to make sure that it is favorable to you.
Faced with the success of this tax regime, the public authorities have taken up the issue and the legislation will soon evolve. Read about the proposed reforms and what could change in our article Housing Crisis: Could Legislation Threaten the Short-Term Rental Market?
The owner of a property for short term rental is liable to certain taxes. While every owner knows the property tax and the household waste removal tax, some taxes are sometimes unknown, especially before a first investment.
Tourist tax is a tax specific to short-term rentals. It is established by numerous tourist municipalities, especially on the coast or in the mountains. It is due to you by the tenant, then it is up to you to pay it to the municipality. If you rent your property via a platform, such as Airbnb, this platform is responsible for collecting the tax and transferring it to the municipalities.
Since January 1, 2023, the housing tax on the main residence has been abolished. But it is still required for second homes! As the owner of a short-term rental property, are you liable for this tax?
Only the owner who wishes to reserve the enjoyment of his property for part of the year and rent it for the rest of the time is liable for this tax (this was confirmed by the Council of State in a Decision of 15 June 2023).
So, 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 not liable for housing tax.
The furnished rental business, whether professional (LMP) or not (LMNP), is considered a professional activity from a fiscal point of view. As the owner of a property for short term rental, you are therefore responsible for The CFE.
To know more about housing tax and CFE for short-term rentals, read our article Real Estate Taxation: Everything you need to know about CFE and Housing Tax in Short-Term Rentals.
Professional furnished rentals, non-professional furnished rentals, taxes and contributions: you now have all the keys in hand to understand which tax regimes and obligations apply to your short-term rental properties.
It's up to you to invest in this promising and promising market, we'll take care of the rest! And if you still have questions about taxation, our team of experts is there to answer them: make an appointment.
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