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PROPERTY

Five things to know about renting out your holiday home in France

Many people who buy a second home in France hope that as well as it being a pleasant bolthole, they will also generate some rental income. But it's a bit more complicated that just posting an advert and waiting for the money to roll in.

Five things to know about renting out your holiday home in France
Your French holiday home could be a source of income. Photo: AFP

While of course renting out your holiday home – either on a long-term or a short-term basis – is perfectly legal in France, there are several things that you need to consider first.

1. Short-term or long-term rental?

For most people who want to keep some time for themselves at their place in France, short-term rentals are the most attractive option. However, the income stream is always a little unreliable, so if your circumstances have changed and you need to make some money then long-term rental might be the better option.

There's no limit to how many days per year you can rent your second home for, but if it's a short-term lease, the same tenant cannot stay for longer than 90 days.

If your property is furnished, you also cannot offer long-term rental agreements of less than one year (or three years if it is unfurnished), so you're looking at a reasonably long-term commitment.

If you're planning to rent out your place on a long-term basis, be aware that the law in France is heavily weighted in the tenant's favour. If you end up with a bad tenant you may find it difficult to get rid of them (especially in winter, the law prevents landlords from evicting tenants who are in arrears between the months of November and March). 

2. Register the property

If you decide to rent out your home, you will need to tell your local mairie and register the property as a rental property. You will also need to apply for a 'non professional SIRET number' to prove that you are properly registered as offering rental accommodation. This can be done at your local tax office.

If your property is in a zone tendu (an area where there is a housing shortage) the mairie may require authorisation to make the change, and there may be charges involved. You can find a list of zones tendu here.

3. Tax

You may think that if your permanent residence is outside France, you don't need to contact French tax authorities. But the law states that if you're earning money from your French property then you will have to start making annual tax declarations.

There are some quite generous tax breaks for landlords in France, meaning that you might end up not having to pay very much, but you still need to hand over tax declarations. You will need to tell the tax authorities in your home country about this income as well, but double taxation deals between France and most other countries mean that you won't be taxed twice on the same income, you simply need to tell two sets of tax authorities about it.

As the building owner, you will continue to pay taxe foncière even if it's rented out, but if you lease on a long term-basis the taxe d'habitation will then be paid by the tenant.

READ ALSO Essential information about the French annual tax declaration

4. Professional landlord or amateur?

This isn't about whether you conduct yourself in a professional manner, it's about what type of accommodation you are renting and the type of tax you pay.

With income from a rental property you either pay tax under the Micro regime or the Réel regime.

There are quite a few rules around this, but basically Micro is more straightforward but Réel, which involves declaring yourself as a professional landlord, has more financial advantages such as a lower tax rate and deductions for mortgage costs. It is nonetheless a complicated process, so we would suggest you get professional advice.

5. Extra costs

As well as taxes on your income from the rental, there are extra costs to consider. Insurance is not compulsory for landlords in France but is strongly advised.

It's not just to cover breakages but to protect yourself if, for example, your tenant seriously injures themselves falling down the stairs and launches legal action against you. This type of scenario will not be covered by standard home insurance, and some home insurance contracts specifically forbid renting the property out, so you will need specialist landlord insurance.

If you are not based near the property you will also need to consider who will clean the place between rentals and arrange for keys for the tenants. In some areas, especially those popular with tourists, there are agencies that provide these type of services but in other places finding someone to do this kind of irregular work with short notice can be difficult.

And finally . . . a word about Paris and Strasbourg – these two cities have enacted special rules to curb the 'Airbnb effect' that was pricing so many local people out of the rental market. If your second home is in either of those two places, make sure you check their rules first.

Member comments

  1. Wondering how all this applies to doing vacation rentals on Air BnB? And if you have to net a specific amount before paying tax on earnings?

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PROPERTY

The post-Brexit tax rules on selling second-homes in France

British second-home owners in France who want to sell their properties are being warned of an extra layer of administration - and expense - in place since Brexit.

The post-Brexit tax rules on selling second-homes in France

Brits wishing to sell property in France may now need to appoint a représentant fiscal (tax representative) in France in order to properly declare the sale to French tax authorities. 

Who?

This law applies to people who own property in France but do not live here – mostly that would be second-home owners but it could also apply to, for example, anyone who has inherited property.

This requirement has always been the case for non-Europeans such as Americans, Canadians and Australians and now also applies to Britons since the end of the Brexit transition period. People who live in another EU or EEA country are exempt.

The law is based on residency, not nationality. So if, for example, you have your main residence in the UK but have an Irish passport, you would still be covered by this requirement.

Exemptions

As well as EU residency, there are a couple of other exemptions;

  • If you sell your property for less than €150,000
  • If you have owned the property for more than 30 years (in which case the sale is exempt from capital gains tax and social security contributions).

What is a représentant fiscal?

This is simply a representative for tax purposes in France, and the person does not need specific qualifications in law or accountancy.

The following can be appointed:

  • A company or organisation already permanently accredited by the tax authorities;
  • A bank or credit institution operating in France;
  • The buyer of your property, if they are domiciled in France for tax purposes (they do not need to be a French citizen);
  • Any other individual who is domiciled in France for tax purposes (they do not need to be a French citizen) – in this case they will need to be accredited by the local authority;
  • If the property is in Paris, the individual will need to be accredited by the Île-de-France tax authorities – département de Paris-Pôle gestion fiscale Centre-Missions foncières, 6 rue Paganini, 75020 Paris. Tel: 01 53 27 46 45

If you decide to appoint an individual rather than a company as your représentant fiscale, bear in mind that the process can be quite complicated, so it would be better to check that they are confident in dealing with the tax authorities, to ensure that you don’t end up with unfinished business with the tax office.

If you chose a company, they will naturally charge for the service. 

Whichever representative you chose, you will need to provide a dossier of documents relating to the property sale and also confirming that you are a tax resident of a country outside France (tax returns, banking information, for example).

Will you have to pay tax on the proceeds of the sale?

If your main residence is not in France, you have no other income in France and you do not complete the annual French tax declaration you will not usually have to pay tax in France on the proceeds of the sale, provided your total estate is worth less than €1.3 million.

Properties worth more than €1.3million may be liable for the impôt sur la fortune immobilière (property wealth tax).

You will of course have to declare the income from the sale in the country where you are resident and, if applicable, pay capital gains tax.

What about French property taxes?

If you have owned property in France you will have been paying the taxe foncière and taxe d’habitation.

These will cease, but bear in mind that taxe foncière is charged based on who owned the property on January 1st of the relevant tax year. So if you sold your property in February 2022, you will still get a tax bill in autumn 2022 to cover that year. Only the following year will the new owner become liable, unless the sale contract for the property included an agreement to share or split outstanding taxes.

Find more information on the Internationals section of the French tax office website HERE or pay a visit to your local tax office in France. Find your local office by searching ‘Centre des Finances publiques’ plus the name of your commune – tax offices are open to the public on a walk-in basis and the staff are usually friendly and helpful. 

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