Commercial property: how do you declare your rental income?
Professional property: how do you declare your rental income?
As soon as your rental income exceeds €23,000 per calendar year, you fall into the category of professional landlord. Here are the steps you need to remember to optimise your tax and file your tax return without any hassle.
What is a professional landlord?
In France, we like the little lines at the bottom of the page: professional or non-professional, furnished or empty, etc. First of all, check that you are in the right category of landlord.
As a reminder, a professional landlord must have :
rental income in excess of €23,000 per annum,
taxable professional income that is less than the rental income in their tax household.
If this is the case, you automatically fall into the LMP category (Loueur en Meublé Professionnel). This includes the rental of both new and old properties, houses and flats. It is therefore fairly flexible, and also offers tax advantages.
To qualify, you need to offer fully equipped accommodation, with a list of compulsory furnishings (to be found on the government website).
If you are eligible for the LMP category, you then have a choice of 2 tax regimes: micro-foncier or régime réel. Let's look in detail at how to complete your tax return under each system.
Good to know: there is help available to help you file your tax return! Services such as Climb can help you with your tax return so that you don't forget anything, and also help you make the most of certain tax relief schemes that are sometimes unfamiliar to individual taxpayers.
Declaring rental income under the micro-foncier scheme
You can rent out your property under the micro-foncier scheme. The result is simplified taxation: a flat-rate allowance of 30% and fewer administrative formalities. This makes managing your rental property quicker and easier, while reducing your tax bill.
However, this scheme is subject to certain conditions. To qualify, your income for the previous year must be capped at :
72,600 € for furnished lettings ;
176,200 for classified tourist accommodation (hotel, bed and breakfast).
Is this the case for you? Then you're automatically covered by the micro-foncier scheme, which means you can file a simplified tax return. Here's how to do it:
- Go to your personal tax area
- Choose Cerfa form 2042 C Pro, for non-commercial profits (BNC)
- Add up the gross amount of your rental income and any allowances and subsidies received
- Deduct the charges payable by the tenant.
You are entitled to a flat-rate allowance of 30% on your property income. However, you cannot deduct any works or expenses under this scheme.
Declaring your rental income under the actual scheme
As soon as your rental income (excluding charges) exceeds €15,000 a year, you can declare it under the actual income scheme. This system is more attractive than the micro-foncier system if your total deductible expenses are 30% higher than your annual rental income excluding charges.
Is this the case for you? Then proceed as follows:
Take form 2031-SD (corresponding to the system of industrial and commercial profits) available on the tax website.
enter your profits in boxes 5KC, 5LC or 5MC
enter your losses in boxes 5NY to 5PZ
if you have non-professional furnished rental losses from previous years and the amount has not yet been deducted, indicate this in boxes 5GA to 5GJ.
In 2023, property owners will have a new obligation when they file their tax return: they will have to complete the "Property" section from their online space on the tax website. They must specify the number and title of occupants, the occupancy status (vacant or rented) and the amount of rent received. This section should be updated whenever there is a change of tenant.
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