French Tax on Rental Income

Understanding Rental Income Taxation in France

Rental income in France is subject to taxation whether you are a resident or a non-resident. The tax regime applied depends on whether the rental is unfurnished or furnished, as each type has different tax implications. Proper tax planning can help minimize liabilities and maximize returns on investment.

1. Taxation on Unfurnished Rentals (Revenus Fonciers)

Unfurnished rental income falls under the Revenus Fonciers category and is subject to two tax regimes:

A. Micro-Foncier Regime (Simplified Taxation)

• Applies if annual rental income is below €15,000.
• A 30% standard deduction is applied for expenses, with taxation on the remaining 70%.
• No need to justify actual expenses.

B. Régime Réel (Actual Expense Deduction)

• Required for income above €15,000, but can be chosen voluntarily for lower incomes.
• Allows deduction of actual expenses, including:
  • Mortgage interest
  • Property management fees
  • Maintenance and repair costs
  • Property tax (taxe foncière)
  • Insurance premiums
• This method can be more beneficial if expenses exceed 30% of rental income.

2. Taxation on Furnished Rentals (BIC - Bénéfices Industriels et Commerciaux)

Furnished rental income is taxed under BIC (Bénéfices Industriels et Commerciaux) rather than Revenus Fonciers, which provides different advantages.

A. Micro-BIC Regime

• Applies if annual furnished rental income is below €77,700.
• A 50% standard deduction for expenses is automatically applied, meaning tax is only paid on half of the income.

B. Régime Réel for Furnished Rentals

• Required for income above €77,700 but can be chosen voluntarily for lower incomes.
• Allows deduction of actual expenses (similar to the Régime Réel for unfurnished properties).
• Additional benefits include property depreciation, significantly reducing taxable income.

3. Social Charges on Rental Income

In addition to income tax, rental income is subject to social contributions:

• French tax residents: Subject to 17.2% social charges (prélèvements sociaux).
• Non-residents from the EU: Also subject to 17.2% social charges.
• Non-EU residents: A reduced rate of 7.5% applies instead of 17.2%.

4. Taxation for Non-Residents

If you are a non-resident earning rental income in France, your income is taxed at a minimum rate of 20% on net rental income. However, tax treaties may help reduce double taxation.

5. Deductions and Tax Optimization Strategies

To reduce tax liability, landlords can take advantage of:

• Cautioneo’s tenant guarantee to secure continuous rental income and minimize the risk of tenant default.
• Mortgage interest deductions.
• Property depreciation for furnished rentals.
• Energy-efficiency renovation deductions under Denormandie or Pinel tax incentives.

FAQ : French Tax on Rental Income

Do I need to declare rental income in France if I live abroad?

Yes, all rental income from French properties must be declared, even if you are a non-resident.

Which tax regime is best for rental income?

The choice depends on income level and expenses. Micro regimes are simpler, but Régime Réel often provides more deductions and lower tax liabilities.

Can I deduct property management fees?

Yes, under the Régime Réel, landlords can deduct fees related to property management, maintenance, and insurance.

How does Cautioneo help landlords optimize rental income?

Cautioneo’s tenant guarantee ensures stable rent collection, reducing income loss and improving long-term rental profitability.