Tax Sytem – Unfurnished Rentals

Empty rental, you declare your rental income in the category of land revenue. Depending on the case, you will report the micro-land or real regime.

With the first, you are taxed on 70% of your rental income.

The second lets you create land deficits are deducted from your taxes.

Micro-land: a 30% reduction on rents

Your rental income does not exceed € 15,000 per year. You are automatically placed under the micro-land plan. You get a discount of 30% on rents. When you declare € 100 rent, you are taxed at € 70.

With the micro-land, you can not deduct certain expenses from your rent (works, loan interest, etc.). If your expenses are greater than the 30% reduction of the micro-land, you better opt for the actual regime. Note that the renunciation of the micro-land you commit to three years of hire.

Subtract your expenses with the actual speed

The actual plan allows you to deduct a variety of expenses from your rent when you declare to the tax authorities. Which lowers your tax. You take the option on your tax return if the lease payments are less than € 15,000 per year. Beyond the actual regime applies automatically.
 
For land gross income must calculate the amount of your annual rent. Then you deduct a number of expenses:
 
  • management fees;
  • unpaid rent insurance premiums or guarantee of rental risks (GRL);
  • repairs and maintenance;
  • diagnostics;
  • improvement works;
  • loan interest;
  • provisions for condominium fees.
Once the calculations, two situations may arise.

  • You release a profit. This is your taxable estate income. You enter on your tax return.
  • You accuse a deficit. It is due to your overall income up to € 10,700 per year. Surplus and loan interest are due on property income the following ten years. Tip: Keep the bills to justify the tax authorities if requested.

Exemple:

You receive € 6,000 in rent per year. You have committed € 10 000 jobs. You release a land deficit of € 4,000. You impute your overall revenues, down by as much. You lighten your taxes.

 
Warning: the allocation of deficits is acquired only if you continue to rent the unit for three years after the first loss statement.

Land profit

housing, which is the most frequent case, your "Net" land is positive: we speak of land benefit. This then adds to your other annual income (wages, salaries, pensions and annuities, business profits, non-commercial profits, etc.). Your total income thus formed is then subject to income tax.
 
Recall that the flat-rate system is always beneficial! Indeed, once applied the 30% reduction, 70% of the annual amount of rent collected is returned to the other income of the year (such as salaries).

The land deficit

When the rent paid by the tenant are lower than the amounts of fees and expenses related to housing, which can be the case when you just bought and that of loan interest must be deducted, your "Net" is land negative: we speak of land deficit. The land deficit resulting deductible expenses other than loan interest, was due to a limited extent and under certain conditions, on your total income (all your other annual income such as salaries, pensions and annuities lifetime, industrial and commercial profits, etc.)

Imputation deficit: with the exception of loan interest

The land deficit is deductible from total income excluding loan interest. Subtracting the loan interest of rent:
 
If the result is positive is that the amount of interest is lower than the rents. then we deduce from this result other charges (work, insurance premiums, etc.). If the balance is negative, it is deducted from the aggregate income of the taxpayer to the tune of € 10,700. The surplus meanwhile carried forward on other property income of the following decade (see below).

Example:
In 2015, an owner receives gross revenues € 16,800. He pays € 3,800 of debt interest, € 14 542 jobs and € 420 property tax.
- Net income of interests: 16800-3800 = € 13,000
- Net income: 16,800 - 3800-14542 -420 = - € 1962
The amount of loan interest is lower rents, the deficit of € 1,962 comes only from other expenses (work and taxes). This amount is fully offset against the total income of the taxpayer as it is below the legal limit of € 10,700.
Conversely, if the subtraction of loan interest on rents shows a negative balance is that they exceed the rents. This result is then blamed exclusively on other property income of the following decade. Other expenses for its part will be fully deductible on total income up to € 10,700 (see below).
 
Example:
In 2015, an owner receives gross revenues € 17,100. He pays € 19,700 of debt interest, € 11 540 jobs and € 1,014 property tax.
- Net income of interests: 17100-19700 = - € 2600
- Net income: 17100-19700 - 11540-1014 = € 15,154
Interest on loans are higher than the amount of the rent. The deficit of € 15,154 thus comes up to € 2,600 of loan interest and other expenses of € 12,554. The taxpayer deducted € 10,700 on his global income. The excess of € 1854 (12554-10700), in addition to € 2,600 (fraction on loan interest) for a total amount of € 4,454 will be due on property income the following ten years.

Allocation of deficit in the annual limit of € 10,700

The fact generate a deficit is fiscally considered since it will be deducted from your total income, that is to say, come down by all of your annual income. The amount subject to income tax is reduced, as is, consequently, the tax itself. The land deficit therefore leads to a decrease in income tax: this is called tax exemption. The allocation is limited: the annual amount of € 10,700 (threshold increased to € 15,300 for those under depreciation Périssol).

The fraction of the deficit that exceeds € 10,700 (€ 15,300 in Périssol) or resulting from loan interest is attributable exclusively on property income the following ten years.

When total income is insufficient to absorb the land deficit, the deficit of surplus is deducted from the aggregate income of the following six years.

Allocation of deficit obligation to rent for three years!

Since renting out land generates a deficit that you charge on your total income, you must maintain the dwelling to rent until 31 December of the third year following the year for which the deduction is made. Otherwise, the charge is, with exceptions, questioned.

Your charges and expenses paid in 2012 generating a land deficit that you charge on your total income declared for the year 2012. For this deficit will not be challenged, you have to rent the accommodation effectively and continues until on 31 December 2015.

Warning: the fact renting the furnished accommodation during the period of three years is comparable to a breach of the lease and consequently to a failure to comply with the legal requirement: the questioning of imputation is incurred.