Now that the tax return period is over, here are the main ways in which you can optimise your tax position through property.
A large part of good wealth management involves optimising your tax position. This is especially true when it comes to property, not just the property itself, but also its location and condition. Here are the main schemes you need to know about if you want to invest wisely, particularly in mountain property, where seasonal lets are just as common as traditional lets.
LONG-TERM RENTAL
The micro-foncier scheme
If you rent out a property with no furniture, under a standard long-term lease, you will be entitled to a 30% allowance under the micro-foncier scheme on the rental income received if it does not exceed €15,000 a year.
Above this threshold, you have to switch to the real estate tax system. You can then deduct various expenses (property maintenance and repair costs, property tax, rental management costs, etc.) from your income from property.
Property losses
If you rent your property empty and carry out major works to the property for an amount greater than the rental income received over the year, you can carry this deficit forward against your property income for 10 years, or even against your overall income for six years, subject to certain conditions.
Under certain conditions, the maximum amount of the property loss that can be deducted from your property income can be doubled, from €10,700 to €21,400 per year, until 31 December 2025, if you carry out energy renovation work in a heat sink.
Non-professional furnished lettings (LMNP)
If you rent a furnished property on a long-term lease, you can take advantage of two tax regimes: micro-Bic (industrial and commercial profits), which offers a 50% allowance on the rental income received, or the actual regime, which allows you to deduct your property expenses and depreciate the value of the property and its furnishings. The actual scheme is often very advantageous from a tax point of view.
The Pinel scheme
Due to expire on 31 December 2024, the Pinel scheme offers a tax reduction for rental investments in new-build property in eligible towns and cities. The tax advantage varies according to the length of the rental commitment. For 2024, the tax reduction is 9%, 12% or 14% of the total cost of the investment (up to a maximum of €300,000) for a rental period of 6, 9 or 12 years respectively.
Under certain conditions, the Pinel + scheme still allows you to benefit from the full Pinel tax reduction (12%, 18% or 21% of the total cost of the property for the same rental period).
Plus...
Other, more specific schemes also offer tax benefits to landlords who rent property on a long-term basis, such as the Denormandie scheme (in the form of a tax reduction for investment in older property), the Loc'Avantages scheme (on condition that the rent is affordable), the Malraux scheme (for the restoration of older buildings) and the Monuments Historiques scheme (for the restoration of listed buildings).
FOR SHORT-TERM RENTAL
Unclassified furnished holiday accommodation
Furnished non-professional property (LMNP) can also be rented on a short-term basis. This year, following the adoption of the Finance Act for 2024, the tax treatment of seasonal rental under the micro-Bic regime has become less attractive for unclassified furnished tourist accommodation. But for this year's tax return, the tax authorities are giving taxpayers the choice of applying these new provisions or keeping the previous, more advantageous ones. For unclassified furnished tourist accommodation, you can take advantage of a 30% allowance on rental income up to a maximum of €15,000 per year, or a 50% allowance up to a maximum of €77,700 per year...
You can also opt for the real income tax system, which is just as attractive as renting out furnished accommodation on a year-round basis.
Classified tourist accommodation
For short-term lets, having your accommodation classified can be very attractive from a tax point of view. This involves using an approved body to award a rating for the comfort of the accommodation. Once your property has been classified, you will benefit from a 71% tax allowance on the rental income received, up to a limit of €188,700 per year. Since the 2024 Finance Act, owners of properties located in less developed areas (B2 or C) have been entitled to an additional allowance of 21%, subject to certain conditions.
It is also possible to take advantage of the actual tax system when renting out a classified furnished tourist accommodation property.
Seasonal lettings: there's a risk that taxation will change again!
A new law on the taxation of furnished tourist accommodation is in preparation and should be voted on in June. Under the micro-Bic scheme, the allowance for unclassified furnished tourist accommodation could be increased to 30%, and the annual rental income threshold could be raised to €23,000. The rate of tax relief on rental income is set to fall sharply for classified furnished tourist accommodation, as is the annual revenue threshold.
Translated with DeepL.com (free version)
Comments