In case you rent furnished and you are an individual or manager of a company subject to income tax:
The owner in professional furnished (Leaseback)
For an annual net rental income of less than € 23,000, you get a deduction of 50% before tax calculation. You are an owner furnished unprofessional (Leaseback). This status is not subject to VAT.
Example of tax calculation in a standard format:
A homeowner cash net annual rent of € 20,000.
It will have a reduction of 50% or € 10,000. The taxable amount will be € 10,000.
The net tax payable to the Treasury will be: € 10,000 x 14% (depending on the portion of the tax schedule) = € 1,400
Income brackets and rates applicable to 2016 income
up to 9 700 € : 0 %
From 9 701 € to 26 791 € : 14 %
From 26 792 € to 71 826 € : 30 %
From 71 827 € to 152 108 € : 41 %
More than 152 108 € : 45 %
If the renter receives less than € 32,900, the tax system of common law is the micro-BIC (lean accounting). In this case, the benefit is determined after an allowance for expenses of 50% on the income statement.
BIC accounting (Industrial and Commercial Profits)
The accounting BIC (Industrial and Commercial Profits) is a commercial accounting (receivables acquired less certain debts) that tracks products (accommodation services) and expenses incurred, unlike the land revenue (accounting revenue - expenses) .The taxpayers have the right to opt for taxation in simplified real or normal real regime. If the landlord collects revenues between € 32,900 and € 236,000, it will be taxable under the simplified real regime. In addition it will be taxable in the normal real regime.
In addition, the tax regime continues to apply in the first year exceeded those limits.
Under the simplified real regime, the taxable income is determined from the acquired assets and certain liabilities recorded in the accounting period of the company. Regardless of the date of receipts and disbursements related.
If the year coincides with the calendar year, are the benefits of that year which are taxable. Otherwise, it is the results of the last financial year. If no exercise is closed during the tax year are held the benefited made between the closing date of the last financial year and on December 31 of that year. The taxable profit (net profit) is then added to the other income of the taxpayer to form the overall income.
Whenever deductible expenses and depreciation exceed the taxable products, the activity emerges a deficit. This is carried forward on the total income of the year (or the next six years in case of insufficient income).
Attention tax administration majorises 25% net profit BIC holders subject to the real regime and not members of an approved management center (AMC) or authorized accountants.
If the annual net rental income exceeds € 23,000 and you withdraw from this activity at least 50% of your income, you are a business owner furnished (LMP). You must be registered in S.C.R. and are imposed on business profits.
Income received from rent is reported and tabled annually in tax office.
The proposed tax benefits are attractive to allow anyone who wants to build an extra income, property assets or acquiring a pied-a-terre.
The owner furnished non-professional (LMP)
The professional furnished renter status offers clear advantages, but it is subject to three conditions:
- Your annual income (rent and charges) must be greater than € 23,000
- Your current income exceeds the income of the tax household subject to income tax
- You are registered in the Commercial Register and renter of quality companies in professional furnished (LMP)
The advantages of the lessor in professional furnished (LMP) are many:
- Allocation of losses: You can deduct any shortfall on your overall income of the year and without limitation amount provided that the deficit does not stem from non-deductible amortization for tax purposes. The deficit surplus is then carried over to your income the next six years. So it can help you significantly reduce your tax bill.
- More professional values: you benefit from the professional capital gains regime which is more advantageous than that of capital gains of individuals. So you are totally exempt from taxation in case of sale of a home if it is rented for at least five years and if your income does not exceed € 90,000 (between € 90,000 and € 126,000, the exemption is partial).
- Solidarity tax on wealth: furnished accommodation are considered as business assets and as such they are not subject to wealth tax.
You must indeed declare rental income received in the category of "Business Profits" and not as property income, as is the case for empty locations.
If the rent, utilities included, you perceive does not exceed € 32,900 / year, you are subject to a flat tax said micro-BIC or micro-enterprise regime.
After indicating the amount of revenue collected during the year on your general income tax return (form No. 2042 C) in "Business Profits", you will receive an allowance for furnished lettings. The tax applies indeed an allowance of 50% and you are therefore taxed on 50% of your earnings up to € 32,900 / year. The tax rate then depends on your marginal tax rate is to say the total amount of your income.
This scheme is very attractive because very simple but is, however, interesting that if your deductible expenses are less than 50%. In addition, the actual speed is more attractive.
PLAN ACTUAL TAX
Beyond € 32,900 of revenue per year, or option, you are subject to real taxation. This means that you will declare your rental income and deduct your expenses (maintenance, management, local taxes ...) for their actual amount and not a flat rate.
Once these transactions deducted for each of your real estate, you get either a profit or a deficit.
In the first case, the profit is added to your other income and subject to income tax.
In the second case, the deficit carried forward that is to say, it may be postponed, under certain conditions, on revenues of the following years and therefore deducted from future profits and for nine months or a total of ten years.
This diet is necessarily less simple than the micro-BIC since you have to keep accounts. From a tax point of view, you must also file a statement No. 2033 containing a balance sheet, an array of fixed assets and amortization and a statement of reserves. So you're interested in to get assistance from an accountant.