Are you dreaming of owning a flat or chalet at the foot of the slopes? Here's some advice on how to make an investment in the mountains that combines profitability, buying pleasure and tax optimisation.
While many French people are looking to make their dream of buying a property in the mountains a reality, they are not losing sight of the profitability of their investment. "Eight out of ten buyers now opt to rent out their property on a seasonal basis in order to generate income. This generally enables them to cover their maintenance and co-ownership costs, or even make a profit," explains Marina Bonachera, Foncia Tarentaise's expert property adviser in Les Arcs and Peisey-Vallandry. Guillaume Charrier, Foncia Tarentaise's expert property adviser in Méribel, adds: "There are several ways of renting out a pied-à-terre in the mountains, each with its own advantages and disadvantages. It all depends on the type of property and the tax objectives of the owners". One option is to buy a property in a serviced residence.
Worry-free property
These residences consist of ready-to-live-in flats. Fully furnished, they are managed by an operator who takes care of the rental management of the accommodation, provides the services associated with the residence (concierge service, catering, etc.) and maintains the facilities (swimming pool, spa, etc.).
"The owner occupies the property for a few weeks a year, while the operator rents it out the rest of the time and pays part of the rent back to the owner," explains Marina Bonachera.
Guaranteed rental income thanks to the signature of a commercial lease
When you buy a property of this type, you sign a commercial lease with the operator of the residence. This contract defines the amount of rent to be paid and the number of weeks that the owner will occupy the property.
The rents received are guaranteed, regardless of the occupancy rate. "The operator is required to pay the owner a rent as defined in the commercial lease. He is responsible for good rental management," explains Marina Bonachera.
Tax relief at the end of the day
"Investing in a tourist residence entitles the owner to an income tax reduction of 11% of the price (excluding VAT) of the property, up to a maximum of €300,000, for a period of nine years," explains Guillaume Charrier.
Recovery of VAT
When the property is purchased, the owner is exempt from VAT equal to 20% of the total price of the home.
Low-tax rental income
"Renting out a property in a serviced residence falls into the category of furnished lettings. Thanks to the status of non-professional furnished landlord (LMNP), the owner of the property receives little or no tax on the rental income," explains Guillaume Charrier. They can choose between two tax regimes. The micro-BIC scheme offers a 50% allowance on rental income. The actual tax system allows you to deduct expenses and depreciation on the property.
To qualify for LMNP status, rental income must not exceed €23,000 or represent more than half the total income of the owner's tax household.
Some disadvantages
The owner of a property in a serviced residence cannot adapt the property to his or her own taste. "The accommodation is standardised, so it's a bit like owning a hotel room," says Marina Bonachera.
It should also be noted that some contracts include "eviction indemnities". "In other words, if the property is resold, the operator can demand compensation from the owner, often amounting to 3% of turnover over the last three years," warns Marina Bonachera.
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